Company is a legal business structure and it is an artificial person which has perpetual succession. Due to increased demand and competition in the market, definitely you need to set up a company. And also that company which has been set up should be registered. It has a common seal which is the official signature. There are many kinds of companies like private limited, public Ltd, One Person Company and so on.
In this blog we have to look upon Public limited Company registration.
What is a Public Ltd Company?
The company is said to be a Public Ltd Company when it is allowed to offer the shares to the public. In a public limited company the liabilities are limited and this acts as a separate legal existence. It is the voluntary association of the people. The formation, its working, delegations, dividing of the shares and the winding up procedure are entirely governed by law. The ownership of the public Ltd company is completely based on the shares of the stock. It can have free trade on the stock exchange. The shareholders have the risk to share to the public. Public Limited Company registration has been implemented through the Company Act (2013). The power of decision making relies upon the Board of Directors. This shows the unity among the directors in the management.
Eligibility criteria for setting up of Public Company
- For setting up of Public Ltd Company, it definitely needs a minimum seven members and at least one must be the resident of India.
- All the members should be above 18 years of age.
- There is no maximum number of the members specified.
- The company collects the amount by selling the shares and the amount collected is called the share capital.
- It requires seven shareholders and three Directors.
- The company should be registered with the company’s house.
- Company’s name should be unique; because it should not resemble the existing companies’ names.
Documents required for registration
For Public Limited Company registration, it requires the below documents:
- Photocopies of PAN for all the Directors or the promoters.
- It needs photocopies of the address proofs of the directors or the shareholders.
- The address proofs include Aadhaar card, voter ID.
- Latest passport sized photographs are also needed.
- If the office is rented in a particular place NOC of the landlord is needed.
- The residential proof is also required.
- As required generally, DIN (Director Identification Number), DSC (Digital Signature Certificate) of all the directors needed.
- Article of association, Memorandum of Association is also needed.
- Public Ltd Company name selection
- Name Approval from MCA (name should have the suffix ‘limited’)
- Get Digital Signature Certificate
- Get Director Identification Number (DIN)
- Generating MoA & AoA
- Generating the Public Company Incorporation Certificate
Advantages of Public Ltd Company
- The Public Ltd Company has its own advantages since it involves the general public. Company’s borrowing power is great.
- The public limited company can raise the funds from the public so easily.
- If any of the shareholders is absent or demised, then it will not affect the existence of the Public Limited Company.
- Generally the shares are listed on the stock exchange, so that there is an easy transferability of the shares.
- It encourages the public to make investment willingly.
- Since the public is involved in the company there is transparency in the management.
- It is an artificial person, so that it is protected legally.
- More funds will be granted to forward many researches and development.
- There is liquidity in the public limited company.
How to convert a Private limited company into a Public Ltd company?
We can convert Pvt Ltd Company into Public Ltd Company by two ways Conversion by default and conversion by own violation.
Conversion by own violation
Conversion by own violationsays that the company name can be changed by passing a special resolution, in a manner provided in Section 21. It can be occurred by passing a particular declaration. Also it can be obtained by approval of the central government by the delegation registrar of companies. Approval of ROC is not important and in conformity in provision of the Act, of a public Ltd company into private limited company.
The name must be changed from private to public. The articles must be altered to delete the prohibitions, restrictions and limitations contained in Section 3(1). And increase the number of members more than fifty. Hence necessary decisions are taken in the board meeting. Filing to form no.29 is not required by a private limited company to be converted into public limited company. On issuing of fresh certificate the company name is to be changed and converted into new company. It is the final stage of a company registration.
Conversion by default
A private limited company is required by law to provide by its articles for the following namely: restrictions on the rights to transfer its shares. Restrictions must be made on the maximum number which should not exceed fifty. Public limited company registration insists also prohibition on any request; to the public to approve for any shares in or debentures of the company registration is to be approved. There must be the period on any approval or invitation of deposits from persons other than its directors, members or relatives.
It is costly as there are a lot of formalities for commencing. The shareholders do not take part in day to day management of the business. It is widely dealing with public’s money so it has to make heavy compliances strictly.
It has to do annual compliances to be made by public limited company with ROC/MCA, SEBI, and RBI etc. Other finance opportunities are possible. Banks and other financial institutions are willing to extend finance to a public company to the one that is listed.
The prestige and confidence are increased. If it is listed on the stock exchange it can attract the media attention.
Few disadvantages are: At worst company can become vulnerable, to a hostile takeover. Also there is added pressure imposed on the market. The company’s share price represents value of the company as viewed by the market. The brand value increases. It gives feeling of trust, confidence to customers, vendors, employees and stakeholders. So it is important to register the public limited company.
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