Public Limited Company
Public Limited Company- A company whose securities are sold on a stock exchange and can be ordered and sold by anyone. Public companies are strictly organized and are required by law to announce their complete and true financial position so that investors can determine the true worth of its stock (shares). Also called publicly held company.
The word Public Company defined under Section 2(71) means a company which—
(a) is not a private company;
(b) has a minimum paid-up share capital as prescribed under the Act:
Any company which is a subsidiary of Public Company shall be considered as a Public Company.
A Public Limited Company is a company having limited liability features and offers shares to the general public. The shares can be purchase by the general public through initial public offer or through buying in share market.
Characteristics of a Public Limited Company
- Number of Directors:
Minimum No. of 3 Directors are required to form a public Company however, there is no limit on the maximum number of Directors under the Companies Act, 2013 to form and commence a public LTD. company.
- Limited Liability Company
In a Public Limited Company, the liability of all the shareholders is limited to the proportion of the amount being invested by them, it means that they are not personally liable for any loss on the part of the Company.
- Paid-up Share Capital
It is provided under the Act that to form a public LTD. company, paid-up share capital must be 5 lakhs or more.
- Prospectus
The prospectus of the public company is a comprehensive document about the affairs of the company the same is issued to the public at large as well in accordance with the Companies Law. As against this, there is no such requirement for a private company as they do not invite the general public.
- Name of the Public Company
It is mandatory to put the word “Limited” at the end of the name of the Public Company.
What are the Advantages of Public Limited Companies under Companies Act
Here are the advantages of a Public LTD. Company
- Better access to capital
It is due to the reason that a Public Company can raise money from the general public as well as from the existing shareholder.
- More Liquidity
There is more liquidity in share as the shareholder can buy or sell them if they are traded over the stock exchange.
- Recognition
Listing on stock exchange provides more public image and recognition. This also provides better opportunities for business.
- Expansion and Growth
This is only due to less risk and a large corpus of money public LTD. company has better growth and expansion prospective.
How to registered Public Limited Company
Public Limited Company has been incorporated through Form SPICe+ which has been introduced by MCA recently the same can be read at the below link. The form offers 10 consolidated services in just a single webform:
Here is a tabular representation of the incorporation of Public LTD. Company
Registration of a Public Limited Company
What are the Documents which are required to incorporate a Public Limited Company
Signed copies of
Proof of identity of proposed directors;
Address proof of proposed directors;
Address proof of the registered office of the company;
Director Identification Number (DIN) of all the directors, if already taken;
Memorandum of Association (MOA)
Articles of association (AOA)
POA
Difference between a Private and Public Limited Company
The common differences between Private and Public LTD. Company are as follows:
| Features | Public Limited Company | Private Limited Company |
| Minimum members | 7 | 2 |
| Minimum directors | 2 | 2 |
| Maximum members | Unlimited | 200 |
| Invitation to public | Yes | No |
| Issue of prospectus | Yes | No |
| Minimum capital | 5,00,000 | 1,00,000 |
| Managerial remuneration | No restriction | Cannot exceed more than 11% of Net Profits |
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