what is public limited company in india

  • A Public Limited Company (PLC) in India is a type of corporate entity that is governed by the Companies Act, 2013, and is listed on a recognized stock exchange. It is distinct from a Private Limited Company, particularly in terms of ownership, share capital, and the ability to raise capital from the public. Here are some key features of a Public Limited Company in India:

    Key Features:

    1. Minimum Shareholders:

      • A Public Limited Company must have a minimum of seven shareholders. There is no maximum limit on the number of shareholders, making it possible for a large number of individuals or institutions to hold shares in the company.
    2. Minimum Directors:

      • It must have a minimum of three directors. At least one director should be an Indian resident.
    3. Share Capital:

      • There is no specific minimum capital requirement for a Public Limited Company. However, it is required to issue a prospectus or file a statement in lieu of a prospectus with the Registrar of Companies (RoC) before making any public offer of shares.
    4. Public Offering:

      • One of the defining features of a Public Limited Company is its ability to raise capital from the public by issuing shares through an initial public offering (IPO). Subsequently, these shares are listed and traded on recognized stock exchanges like the Bombay Stock Exchange (BSE) or National Stock Exchange (NSE).
    5. Transferability of Shares:

      • Shares of a Public Limited Company are freely transferable, subject to compliance with the provisions of the Companies Act and the company’s articles of association.
    6. Corporate Governance:

      • Public Limited Companies are subject to stricter regulatory and compliance requirements compared to Private Limited Companies. This includes holding regular board meetings, annual general meetings (AGMs), and filing various statutory returns with the RoC.
    7. Statutory Compliance:

      • Compliance with various regulations set by regulatory authorities such as the Securities and Exchange Board of India (SEBI) is mandatory for Public Limited Companies.

    Process of Incorporation:

    1. Name Reservation:

      • Obtain approval for the proposed name of the company from the Ministry of Corporate Affairs (MCA).
    2. Digital Signature Certificate (DSC) and Director Identification Number (DIN):

      • Obtain DSC for directors and apply for DIN, if not already obtained.
    3. Drafting of Memorandum and Articles of Association:

      • Draft the Memorandum of Association (MoA) and Articles of Association (AoA) of the company.
    4. Filing of Incorporation Documents:

      • File the incorporation documents, including the MoA, AoA, and other required forms, with the RoC.
    5. Certificate of Incorporation:

      • Once the documents are verified, the RoC will issue a Certificate of Incorporation, indicating the commencement of the business.
    6. Allotment of PAN and TAN:

      • Obtain the Permanent Account Number (PAN) and Tax Deduction and Collection Account Number (TAN) for the company.
    7. Commencement of Business:

      • A Public Limited Company can commence its business after obtaining the Certificate of Incorporation, but it cannot issue a prospectus or make a public offer without filing a statement in lieu of a prospectus.
    8. Listing on Stock Exchanges:

      • If the company plans to offer its shares to the public, it needs to comply with the regulations of SEBI and list its shares on a recognized stock exchange.

    The incorporation process involves compliance with various legal and regulatory requirements. Therefore, engaging with professionals such as chartered accountants and company secretaries is advisable to ensure a smooth and compliant incorporation process. Keep in mind that regulations and procedures may be subject to updates, so it’s crucial to refer to the latest guidelines from relevant authorities.