Table of Contents
What is a Public Limited Company?
Features of Public Limited Companies
- Number of Shareholders: To set up a Public Limited Company, you must have at least 7 shareholders. However, the Companies Act or any other relevant statute does not place a maximum limit on the number of shareholders that a Public Limited Company can have.
- Separation between Management and Ownership: Unlike businesses like Sole Proprietorships and Partnership Firms, where the owner is solely responsible for controlling the management of the business, the owner or shareholder of a Public Limited Company does not get involved in the management of the company at all. For this purpose, the owners appoint directors of the company who collectively form the Board of Directors of the company. All key managerial decisions of a company are made at the meetings held by the Board of Directors.
- Board of Directors: A Public Limited Company must have at least three directors to control its management, according to the Companies Act, 2013. However, this number can be extended upto 15.
- Company as a distinct legal entity: A Public Limited Company must get registered or incorporated with the Registrar of Companies in the manner prescribed in the Companies Act, 2013. As soon as it gets incorporated, the company gains a legal identity of its own, distinct from the identity of its shareholders or owners.
- Limited liability for shareholders: The relevance of the word “Limited” in a Limited Company is that the liability of its owners is restricted to the amount of the capital he has subscribed to. Under any circumstances, in order to pay off the liabilities in the name of the company, the shareholders will not have to pay any amount exceeding the worth of shares that they hold.
- Transferability of shares: Public Limited Companies that are listed on stock exchange platforms can trade their shares to all other listed entities on this platform. The sale of such shares are also open to the listed individuals, in addition to listed organizations on such platforms.
- The prospectus of the company: All Public Limited Companies must publish their company’s prospectus containing all its necessary details. Note that this is only mandatory for public companies as they trade their shares with the general public, and need to be more transparent than all other types of companies.
- Perpetual Existence: A Public Limited Company can exist beyond the life of its shareholders. Upon the death or permanent departure of any of the shareholders of a Public Limited Company, the shares he held are simply traded or transferred to a new shareholder for replacing the departed shareholder.
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Minimum Requirements for Public Limited Company
- To form a Public Limited Company, you need at least seven shareholders.
- Before incorporating your public limited company, the shareholders must appoint at least three directors to control the management of the company.
- To sign the application for incorporation of your company digitally, the authorized director needs a Digital Signature Certificate (DSC).
- All the current directors of a company must have a Director Identification Number issued by the Ministry of Corporate Affairs.
- Prepare and arrange all the other documents necessary for company registration. We have mentioned the complete list of all these documents in the next section.
Documents Required for Public Limited Company Registration
|Docs of Registered Office|
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The procedure for registering a limited liability public company
A Public Limited Company is expected to raise huge funds from investors and the general public for starting a new business, expanding an existing one, or investing in cutting-edge research and development for enhancing the growth of the business. This is exactly why a Public Limited Company is best suited for large businesses with high scale of business operations and high hopes of having a global reach. So, if you want to own a company with restricted liabilities and responsibilities and earn lots of profits, a public limited company can be your best choice.