Public Limited Company Registration in India

Public Limited Company registration in India is a significant step for businesses that aim to scale operations and access broader capital markets. This business structure allows companies to raise funds from the public through share issuance, providing opportunities for substantial growth and expansion. However, the registration process involves legal requirements and compliance with the Companies Act, 2013. It is crucial for a successful incorporation to understand the necessary steps, which include documentation and regulatory obligations. In this article, you will learn about the procedure for a Public Limited Company in India, the documents required, and the benefits.

What is a Public Limited Company?

A Public Limited Company in India is a business entity that offers its shares to the general public and is governed by the Companies Act, 2013. This structure allows companies to raise capital by issuing shares to investors through public offerings.

Key Characteristics of a Public Limited Company

There are some of the Key characteristics of a Public Limited Company mentioned below:

• A PLC has its own legal identity, distinct from its shareholders. It has the authority to own assets, take on liabilities, and enter into contracts on its own.
• Shareholders’ liability is limited to the amount unpaid on their shares. They are not personally responsible for the company's debts beyond their investment.
• A PLC must have at least seven shareholders and three directors. There is no limit on the total number of shareholders allowed.
• While previously a minimum paid-up capital of Rs.5 lakhs was required, this stipulation has been removed. However, sufficient capital is still necessary to meet business needs.
• Shares of a PLC are freely transferable. It allows shareholders to buy or sell shares without restrictions.
• The company continues to exist regardless of any changes in ownership or management. It continues to operate regardless of shareholders' or directors' changes.
• PLCs can raise funds from the public by issuing shares through Initial Public Offerings and listing on stock exchanges.

Public Limited Company Registration in India: Eligibility Criteria

To register a Public Limited Company in India, certain eligibility criteria must be met as per the Companies Act, 2013. Below is a clear breakdown:

• Minimum Number of Directors and Shareholders

A Public Limited Company must have at least three directors, with no upper limit on how many directors it can have. However, appointing more than fifteen directors requires passing a special resolution.

Additionally, a minimum of seven shareholders is required to form a PLC. But there is no maximum limit shareholders number.

These foundational requirements ensure that the company has a diverse management and ownership structure, aligning with the principles of a public company.

• Residency Requirements for Directors

At least one director of the company must have resided in India for a total period of not less than 182 days in the previous calendar year as per Section 149(3) of the Companies Act, 2013. This ensures that the company has a local representative familiar with Indian laws and regulations.

• Unique Name Requirements and Inclusion of "Limited"

When you name a Public Limited Company in India, it is essential to follow specific guidelines as per the Companies Act, 2013. The company's name must be unique, which ensures it doesn't closely resemble or duplicate existing company names or trademarks, thereby preventing legal complications and public confusion. Additionally, the name must conclude with the word "Limited," clearly indicating its status as a public company. Adhering to these naming conventions is crucial for the successful registration and operation of a Public Limited Company in India.

Types of Public Limited Company Registration

Public Limited Companies in India are categorized based on whether their shares are listed on a recognized stock exchange. This classification affects their regulatory obligations, access to capital, and public visibility.

• Listed Public Limited Companies

Listed companies have their shares traded on recognized stock exchanges like the Bombay Stock Exchange or the National Stock Exchange. This listing provides them with enhanced visibility, easier access to capital, and increased liquidity for their shares. However, they must adhere to stringent regulatory requirements set by the Securities and Exchange Board of India. This includes regular financial disclosures and compliance with corporate governance norms.

• Unlisted Public Limited Companies

Unlisted public companies do not register with any stock exchange. Although they remain public companies, their shares are not available for trading on the open market. This can be due to various reasons, such as the company being relatively new, preferring to maintain greater control, or operating in industries where listing is less common. These companies are subject to fewer regulatory requirements compared to their listed counterparts, but still benefit from the legal structure and limited liability offered by the public company form.

Documents Required for Public Limited Company Registration

To register a Public Limited Company in India, directors and shareholders must provide specific documents to verify their identity and address. These documents are essential for compliance with the Companies Act, 2013, and to ensure a smooth registration process.

For Indian Nationals

• PAN Card
• Identity Proof
• Address Proof
• Passport-sized Photograph

For Foreign Nationals

• Passport
• Address Proof
• Passport-sized Photograph

You may be required to provide additional documents if applicable.

For the Company

• Registered Office Address Proof

You have to provide documents like:

1. Utility Bill
2. Ownership Documents of the property.
3. Rental Agreement if the property is rented.
4. No Objection Certificate is needed from the owner of the property if the property is rented.

• Memorandum of Association
• Articles of Association

Public Limited Company Registration Process

A Public Limited Company registration process in India involves a series of methodical steps to ensure legal compliance and smooth incorporation. Below is a clear and concise guide to the process:

Step 1: Obtain Digital Signature Certificates

All proposed directors must acquire a Digital Signature Certificate from a government-recognized certifying authority. The DSC is required to digitally sign documents during the FSSAI registration process.

Step 2: Apply for Director Identification Numbers

Each director must obtain a Director Identification Number, which is a unique identification number assigned by the Ministry of Corporate Affairs. This can be applied for through the SPICe+ form during the incorporation process.

Step 3: Reserve the Company Name

Choose a unique name for the company and ensure it complies with the naming guidelines set by the MCA. The name can be reserved using the RUN service available on the MCA portal.

Step 4: Draft Memorandum and Articles of Association

Prepare the Memorandum of Association and Articles of Association, which define the company's objectives, scope of activities, and internal regulations. These documents must be signed by the subscribers and directors.

Step 5: File Incorporation Forms with the Registrar of Companies

Submit the SPICe+ form along with the necessary documents, which include the MOA, AOA, proof of identity and address of directors, and proof of registered office address, to the Registrar of Companies through the MCA portal.

Step 6: Obtain the Certificate of Incorporation

Upon successful verification of the submitted documents, the ROC will issue the Certificate of Incorporation, which includes the Corporate Identification Number and serves as the official proof of the company's existence.

Post-Incorporation Compliance for Public Limited Companies in India

Once your Public Limited Company is incorporated in India, it is crucial to adhere to post-incorporation compliance to maintain legal standing and avoid penalties. Here is a breakdown of essential steps:

• Appointment of a Qualified Company Secretary

A full-time Company Secretary is mandatory for every Indian PLC. This professional ensures adherence to statutory and regulatory requirements, facilitates board meetings, and maintains corporate records. For companies with a paid-up share capital of Rs.10 crore or more, appointing a CS is a legal requirement under the Companies Act, 2013.

• Holding the First Board Meeting Within 30 Days

A newly incorporated company in India is required to hold its first Board Meeting within 30 days of incorporation, as mandated by Section 173 of the Companies Act, 2013. During this meeting, the Board must appoint the first statutory auditor, confirm the registered office address, and make other initial decisions essential for the company's operations. If the Board fails to appoint the auditor within this period, the company's members must do so within 90 days at an Extraordinary General Meeting. Non-compliance with these requirements can lead to penalties and affect the company's legal standing.

• Issuance of Share Certificates to Subscribers

Share certificates must be distributed to the subscribers of the Memorandum of Association within 60 days from the date of incorporation. These certificates serve as legal proof of ownership and are essential for maintaining accurate company records. Non-compliance may lead to penalties being imposed on the company and its officers.

• Maintaining Statutory Registers and Records

Public Limited Companies in India are mandated to maintain several statutory registers to ensure transparency and compliance under the Companies Act, 2013. Key registers include the Register of Members, the Register of Directors and Key Managerial Personnel, and the Register of Charges, documentation of any charges against company assets. These registers must be kept at the company's registered office or another approved location and should be regularly updated. They are accessible for inspection by members and, in some cases, the public, as stipulated by the Act. Non-compliance can lead to significant penalties

• Filing Annual Returns and Financial Statements with the Registrar of Companies

Public Limited Companies in India are mandated to file annual returns and financial statements with the Registrar of Companies to ensure transparency and regulatory compliance. The annual return is submitted using Form MGT-7, which provides detailed information about the company's shareholders, directors, and other key details. This form must be filed within 60 days of the conclusion of the Annual General Meeting. Additionally, financial statements, including the balance sheet and profit and loss account, are filed using Form AOC-4 within 30 days of the AGM. Timely submission of these forms is crucial to avoid penalties and maintain the company's good standing.

Benefits of Public Limited Company Registration in India

A Public Limited Company registration in India offers several significant advantages that can support business growth and enhance credibility:

• Shareholders' assets are safeguarded, and their liability is limited to the amount unpaid on their shares. This means that in the event of company debts or losses, shareholders are not personally responsible beyond their investment.
• PLCs can raise substantial funds by issuing shares to the public, which provides a major boost in capital for expansion and operations. This access to a broader investor base facilitates easier fundraising compared to private companies.
• Being publicly listed increases transparency and trust among investors, customers, and partners. The rigorous regulatory compliance and disclosure requirements enhance the company's reputation and can attract more business opportunities.
• The company's existence is not affected by changes in ownership or management. It continues to operate uninterrupted even if shareholders or directors change, which ensures business continuity.
• Shares of a Public Limited Company can be openly bought and sold on stock exchanges. It provides liquidity to shareholders. This flexibility makes it easier for investors to buy or sell shares, enhancing the company's attractiveness to potential investors.

Post-Incorporation Compliance

After a Public Limited Company registration in India, it is essential to comply with several post-incorporation requirements to ensure legal standing and smooth operations. Here is a clear and concise overview of these obligations:

• Appointment of a Qualified Company Secretary

Every PLC must appoint a qualified Company Secretary to oversee legal compliance and corporate governance. The CS plays a pivotal role in ensuring adherence to statutory requirements and facilitating communication between the board and stakeholders.

• Holding the First Board Meeting Within 30 Days

The first Board Meeting should be conducted within 30 days of incorporation, as per Section 173(1) of the Companies Act, 2013. This meeting addresses key decisions such as appointing the first auditor, confirming the registered office address, and discussing initial business operations.

• Issuance of Share Certificates to Subscribers

Share certificates must be issued to subscribers of the Memorandum of Association within two months of incorporation, under Section 56(4)(a) of the Companies Act, 2013. These certificates serve as legal proof of ownership and are essential for maintaining accurate company records.

• Maintaining Statutory Registers and Records

Public Limited Companies in India must maintain key statutory registers as per the Companies Act, 2013. These include the register of Members, Register of Directors and Key Managerial Personnel, and Register of Charges. These registers must be regularly updated, kept at the registered office, and made available for inspection.

• Filing Annual Returns and Financial Statements with the ROC

Public Limited Companies in India are required to file two key annual documents with the Registrar of Companies to ensure transparency and compliance:

1. Form MGT-7

This form provides details about the company's shareholders, directors, and other key information. It should be submitted within 60 days after holding the Annual General Meeting.

2. Form AOC-4

This form contains the company’s financial statements, including the balance sheet and profit and loss account, and must be submitted within 30 days of the AGM.

Timely submission of these forms is crucial to avoid penalties and maintain the company's good standing.

Conclusion

A Public Limited Company registration in India offers significant advantages. However, to maintain legal standing and ensure smooth operations, PLCs must adhere to post-incorporation compliances such as appointing a qualified Company Secretary, holding the first Board Meeting within 30 days, issuing share certificates within 60 days, maintaining statutory registers, and filing annual returns and financial statements with the Registrar of Companies.

Online Legal India offers expert assistance in company registration, GST filing, and ongoing compliance support. This ensures your business remains compliant and thrives in the competitive market. Contact our experts today.