What is a Public Limited Company
The public limited company is a type of large business entity. It has limited liability and also offers shares to the public. It provides huge benefits to the people compared to the private limited company.
Public Limited Company is a separate legal entity with public at large as share holders. For doing business in a outsized extent, the finest preference would be Public Limited Company.
The Public Limited Companies are solely permitted to trade on the stock exchanges and congregate enormous capital from public investors.
What is a Public Limited Company
Public Limited Company is a separate legal entity with public at large as share holders. For doing business in a outsized extent, the finest preference would be Public Limited Company.
The Public Limited Companies are solely permitted to trade on the stock exchanges and congregate enormous capital from public investors.
Minimum Requirement to Form a PLC
- Minimum Three Directors and Maximum 50 Directors.
- Minimum 7 share holders required.
- Minimum 5 Lakhs of share capital.
Listing of Public Limited Company
DO you know there are 21 stock exchanges in India. But more popular stock exchanges are NSC (National Stock Exchange) & BSE (Bombay Stock Exchange).
Public Limited Companies that are looking for extensive spotlight to the market and for massive resource of equity funding may approach the Stock Exchange for its Listing.
Public Listing on Stock Exchanges has many advantages and their own procedures.
Procedure for Incorporation of PLC
1. Obtain DIN number for the Directors
2. Obtain Digital Signature to the Directors
3. Name approval for the company by submitting form INC 1
4. Application of Form INC 7 along with MOA & AOA
5. Submission of DIR-12 & DIR 2
6. Certification of Incorporation
Documents that are required
ID Proof of the Directors
Address proof of the Directors
PAN Card of the Directors
Passport size Photo two numbers
Copy of the Rental deed for the proposed company
Latest Electricity Bill
Advantages of listed in Stock Exchange
Privileged Profile: Public Limited Companies that are listed in stock exchanges are advanced recognizable and visible than a Private Limited or unlisted companies. Further this visibility because of the listing helps the company to attract new Investors and also it helps the company to catch the attention of new clients.
Access to Capital: For any small and medium scare company, the hurdle towards growth is Capital. The companions which are listed on Stock exchange can raise the capital easily by way of visibility. Heavy industries needs huge capital for its operation, that is highly possible by way of public contribution.
Timely disclosure of corporate information: The regulations and laws provides for timely revelation of information relating to dividends, bonus, date, company related information by the company. This endow with more precision and constructs confidence.
Increases Visibility: As Crores of people visits the stock exchange portal every day for investment, this has become a massive branding and because of this the Listed Public limited Company has got a very huge visibility in the market.
The above mentioned points are Some of the main advantages of getting listed in the Stock Exchange which will be befifitted.
Why to go for Public Limited Company
Limited Liability: As we all know that the Liability of the directors or the share holders is limited to their shares.
Separate Legal Entity: Public Limited company is a separate legal entity and each share holder is a part of it.
Owning a Property: As the company its a separate entity, it can acquire property in its own name. No share holders can claim the property of the company until its dissolved.
Huge Capital: A public company are allowed to sell shares to investors for raising its capital. It issuing shares through stock markets. Public companies can also raise capital by issuing bonds and debentures.
Transferable Shares: The shares of the public limited company can sold and purchased through Stock exchange.
Transparency: Pubic limited companies are rigorously regulated and are required by law to publish their financial statements to ensure the true financial position of the company. This also facilitates to establish the market value of its shares.
Uninterrupted existence: As the company has ‘Perpetual Succession’, the death of the Share Holders or the Directors will not affect the existence of the company. A company can be clogged only by dissolution process.
Procedure for listing a Public company (simplified)
- Submission of Draft Prospectus before the Exchange and SEBI as per requirements
- The stock exchange verifies the application and process the same.
- The exchange officials will visit the Public Company for direct verification.
- The promoters need to be present before exchange office for an authentication.
- After submission of all the requirements, with the approval of the committee, the Stock Exchange issues principle approval.
Is there any Disadvantages in Public Limited Company
- It has got much legal formalities to comply, but a proper company formation consultant can assist you to undergo the legal compliances properly
- Difficult decision making process
- Dilution of equity is one of the major disadvantage. As it selling the part of its ownership right to a stranger, hence the profit is also diluted.
- The management has to hold at least 51% of the total shares in order to hold the right over the company.
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