Public Limited Company

Public Limited Company

As the name suggest, public limited company has a wider coverage than a private limited company. It covers “Public” in general, hence called as a 'Public Limited Company'. A public limited company (plc) is a company whose securities are available and traded publicly on the stock exchange. These companies are usually only created for very specific reasons. These sorts of companies are far less common.

The features of Public Limited Company are as follow:

·         Minimum no of members - It shall have minimum 7 shareholders and no upper limit for the maximum number of shareholders.

·         No of directors - It shall have at least 3 directors.

·          Shares - Subject to the compliance of the Companies Act, the Company can issue shares to public and it can accept deposit from public.

·         There are many restrictive provisions of Companies Act that controls the operations of public limited companies. It is suitable for business entity that requires huge capital investment.

·          Meetings- It should hold statutory meetings and obtain government approval for the appointment of the management.

Advantages of incorporating a Public Company:

1)      Limited liability- There is limited liability for the shareholders in the PLC.

2)      Separate legal entity- It has a separate legal entity which means that there is continuity even if any of the shareholders die.

3)      Capital - These businesses can raise large capital sum as there is no limit to the number of shareholders. Since a public company can sell its shares to the public and anyone can invest their money and the capital that can be raised is larger.

4)      Access to Finance- A public limited company can easily obtain financing for its operations. Banks and other financial institutions are more willing to extend financing to this type of company than to smaller forms of business entities.

5)      Brand Awareness- This type of business is often listed in a stock exchange. People will be able to easily and quickly recognize the name of the company. Due to this advantage i.e. brand recognition a company has, the more business it will have.

6)      Easily transferable shares- The shares of the business are freely transferable providing more liquidity to its shareholders

7)      Advertisement-Shares can be advertised and thus Shares can be easily sold through the stock exchange. 

8)      Borrowings- Large plc’s may find it easier to borrow from banks and thus Cheaper borrowing and bulk purchasing 

Conditions for the Registration of a Public Company

Ø  Shareholders (Members)

      There shall be at least 7 members/shareholders in the company.

      There is no upper limit for the maximum no. of shareholder.

      Any natural, artificial person, LLP, OPC or any other registered company can become member of the company.

Ø  Directors

      There shall be at least 3 directors in the company.

      One of the directors must be resident of India i.e. in India not less than 182 in the previous calendar year.

Ø  DIN

Ø  Proposed director should have Director Identification Number (DIN) issued by Ministry Company Objects of Corporate Affairs (MCA).

Ø  Company Name

The name of a Public Limited Company shall have suffix “Limited" at the end of the name. Company Name has three parts, i.e..,

      The Name', - It must be unique and not identical or similar to registered trademark.

      'Activity' – It must signify the business.

      Limited' - There should be suffix Limited at the end of company name. Proposed Company name shall be approved by the Registrar of Companies.

Ø  Registered Office Address

A temporary address is required at the time of registration of Company. It could be an address including address of any of the Directors.

After registration, the company has to file the permanent business address with documentary proof of address, ownership etc.

Objects of the company refer to proposed business activities.

Objects provide the direction to the company. 

Company objects shall be legal and shall not misuse or harm the society.

Identifying the major objects in particular line of business help in setting the goal.

The name of company shall also signify the main, prerequisite objects. Company can have multifaceted objects and may not describe a particular object.

Ø  Digital Signature Certificate (DSC)

All documents are filed online with Registrar of Companies. Digital Signature certificate is the ultimate way to verify the authenticity of document. Hence, Digital Signature Certificate of the Director shall be used for to verify the authenticity of the document.

Ø  Professional Certification

Services of professionals such as Chartered Account, Company Secretary and Cost Accountant are required to make necessary Certifications and declarations for incorporation of a Public Limited Company.

Author: This blog is written by  Ms. Chanchal Sharma, a passionate blogger of Aapka Consultant. 

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