Public Limited Company

A Public Company: What Is It?

A public company, sometimes referred to as a public limited company, is a kind of commercial entity in which shares of its equity are owned by the general public. Typically, brokers, traders, and investors can purchase and sell these shares on reputable stock exchanges. A broad range of people have the opportunity to invest in and become shareholders in this kind of business.

The fact that public corporations must comply with more stringent laws and transparency requirements sets them apart from private companies. A public limited company's daily operations are overseen by an executive team, but the ownership of the business is divided among many individual investors who buy stock in the company. These shareholders frequently have the ability to cast ballots in the election of a board of directors, which selects the executive team in charge of managing the business operations of the firm.

Law Responsible for supervising

In India, the Companies Act of 2013, which superseded the Act of 1956, provides the main framework for public company law. The creation, management, dissolution, and organisational structure of Indian companies—including public limited companies—are outlined in the Companies Act of 2013.

Important Sections of the 2013 Companies Act  

Important rules are enforced by the corporations Act of 2013, which governs public corporations in India:

1. No Minimum Capital: The corporations Act of 2013 does not impose a minimum capital requirement on public corporations.
2. Transparent Reporting: Financial information from publicly traded companies, including balance sheets, income statements, and cash flow statements, must be submitted to the Ministry of Corporate Affairs for external auditing.
3. Directors: The minimum number of directors required by law must be present on the board of public companies.
4. Prospectus: To assist prospective investors, public companies that offer shares through an IPO are required to publish a comprehensive prospectus.
5. Shareholder Rights: Under the Companies Act and other regulatory protections, shareholders are entitled to vote on important issues.
6. Regulation: In order to safeguard investors' interests, SEBI regulates public companies and makes sure that securities rules are followed.

Public Company Types

Public businesses can be divided into two categories:

1. A corporation whose shares are listed and exchanged on a stock exchange is known as a listed company.
2. Unlisted Company are those whose shares aren't listed on a stock exchange, making it impossible to trade them there.

Crucial Features of a Public Limited Business

A detailed explanation of some of a public limited enterprise's key attributes is provided below:

Directors' Board

A public limited company is required by the Companies Act to have a minimum of three directors; however, there is no upper limit. This board of directors is in charge of managing and making decisions for the business.

Name of Company

It is legally required for all publicly traded corporations to have "Limited" in their name. This inclusion acts as a distinguishing mark indicating that the business is accepting investments from the general public.

Company prospectus

Company prospectus must be created and distributed by the company's enterprises. The prospectus gives prospective investors important information by giving a thorough rundown of the business's operations and financial situation.

Paid-Up Capital

There is no minimum initial share capital required to register a public limited company under the rules set forth in the Companies Act. Because of this flexibility, businesses can choose their capital structure according to certain requirements and objectives.

Important Conditions for Forming a Public Limited Company

In order to form a Public Limited Company, you must fulfil the necessary prerequisites:

1. Minimum Shareholders: In order to register a corporation, you need to have seven or more shareholders.
2. Minimum Directors: Three directors should be appointed to the company at minimum.
3. Digital Signature Certificate: The certificate must be held by a minimum of one director.
4. Obtaining a Director Identification Number (DIN) is a mandatory requirement for all directors.

Benefits of Limited Liability Companies

The following are the benefits of registering your businesses as public limited companies:

Issuing Shares to the Public

Public corporations can obtain capital by either issuing shares to the general public or by obtaining loans secured by their assets. The opportunity to exchange shares on the open market provides liquidity for shareholders, and public scrutiny increases confidence in management.

Increased Finance Opportunities

Because of increased regulatory oversight, public corporations have access to a wide range of financial instruments that provide different ways to raise funds. In order to provide shareholders with investment opportunities, this involves selling shares and obtaining loans.

Additional Possibilities to Develop and Grow

A frequent strategy used by smaller businesses to finance their expansion is to go public by combining loans with public share offerings. Increased accountability for public corporations can improve their operational efficiency.

Shares' Transferability

Public Company Businesses allow their stock to be freely transferred, allowing shareholders to purchase or sell shares without the need for director approval. Compared to private corporations that have restrictions on share transfers, this makes attracting investors easier.

Documents Needed to Register a Public Limited Company

The aforementioned paperwork is required in order to register a public limited company:

1. Identity verification for directors and shareholders, such as a voter ID, PAN card, or Aadhar card
2. Verification of address for directors and shareholders
3. PAN card information for each shareholder, director, and member
4. Address verification, such as recent utility bills (no more than two months old), for your company's office or business location
5. a letter from the landlord of your office approving the usage of the space by your business
6. Certificates of digital signature (DSC) for designated directors
7. Copies of the Memorandum of Association (MOA) and Articles of Association (AOA) for your business

Lawgical Adda makes the complex procedure of registering a public limited company easier by filling it with a group of knowledgeable experts who are knowledgeable about all applicable laws and regulations.

We provide complete assistance to guarantee a simple and easy Public Limited Company registration process, from getting Digital Signature Certificates (DSC) to filing the required forms and papers.