Public Limited Company (Ltd)Incorporation

What is a Public Limited Company?

A Public Limited Company in India is a business entity where shares are made available to the public, and shareholder's liability is limited to their investment. While not all Public Limited Company shares are listed or traded on stock exchanges, the company can choose to list its shares by complying with the relevant regulatory requirements.

Legal and Regulatory Framework:

The Companies Act, 2013 lays down the law, and the Ministry of Corporate Affairs is the regulatory body for Public Limited Companies in India. This Companies Act, 2013 defines the legal structure, rules, and regulations that govern the formation, operation, and dissolution of Public Limited Companies. The Ministry of Corporate Affairs (MCA) oversees the entire registration process, ensures adherence to statutory requirements, and regulates corporate governance standards.

• SEBI Regulations: Including LODR (disclosures and corporate governance), ICDR (capital raising), Insider Trading, and Takeover Regulations.
• Compliance with Stock Exchange Rules: Specific operational and regulatory standards of the exchange (e.g., BSE, NSE).
• Listing Agreement: Ensuring the company adheres to the terms agreed upon with the stock exchange.

Reasons to Choose Public Limited Company:

• Access to Capital: Ability to raise funds through public investment, even without listing shares on a stock exchange.
• Enhanced Credibility: Public companies are perceived with higher trust in the market.
• Limited Liability Protection: Shareholders’ liability is restricted to their investment in shares.
• Growth Potential: Suitable for large-scale businesses looking for expansion.
• Flexible Share Transferability: While shares may not always be listed, they can still be transferred or sold privately.

Minimum Requirements:

• Capital: No minimum capital requirement.
• Company Name: Must be unique and comply with naming guidelines.
• Directors: At least 3 directors, with at least 1 being a resident director.
• Registered Office: Must have a local registered office within the country.
• Shareholders: Minimum of 7 shareholders, with no maximum limit.

Documents Required:

• PAN Card, Aadhaar, and address proof (for directors and shareholders).
• Passport-sized photographs of all directors & members.
• Proof of registered office (e.g., electricity bill, rent agreement).
• Digital Signature Certificate (DSC) for directors.

Advantages After Incorporation:

• Ability to List Shares: A Public Limited Company can list its shares on a stock exchange to raise larger capital from public and institutional investors.
• Enhanced Credibility and Trust: Public companies enjoy greater market recognition and credibility.
• Higher Valuation: Public companies often achieve higher market valuations.
• Increased Access to Capital: Public companies can raise significant capital through public offerings or private placements, even without stock exchange listing.
• Investor Confidence: Enhanced transparency and accountability make the company more attractive to investors.
• Limited Liability Protection: Shareholders are protected from business liabilities beyond their shareholding.
• Perpetual Succession: The company continues to exist despite changes in shareholders or directors.

Compliance Requirements:

• Annual General Meeting (AGM): Held within 6 months of the financial year-end.
• Annual Returns (Form MGT-7 or MGT-7A): Filed with MCA within 60 days of the AGM.
• Auditor Appointment (Form ADT-1): Appoint an auditor within 30 days of incorporation, with annual audits required.
• Board Meetings: Minimum of 4 meetings annually.
• Director KYC (Form DIR-3 KYC): Annual KYC for all directors.
• Director’s Report: Prepared and submitted along with financial statements in Form AOC-4.
• Financial Statements (Form AOC-4): Filed annually with the MCA.
• GST Filings (if applicable): Regular GST return filings (GSTR-1, GSTR-3B).
• Income Tax Filing (ITR-6): Filed annually with the Income Tax Department.
• Statutory Registers: Maintain mandatory registers for members, directors, charges, etc.