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THINGS TO KNOW ABOUT PUBLIC LIMITED COMPANY

MEANING OF PUBLIC LIMITED COMPANY:

A Company whose shares are traded freely on a stock exchange. A public company may be formed for any lawful purpose by seven or more persons, by subscribing their names to a memorandum and complying with the requirements of this Act in respect of registration. The securities of a public company may be quoted on a Stock Exchange. The number of members is not limited to two hundred. The securities of any member in a public company shall be freely transferable.


A Public Limited Company is a Company limited by shares in which there is no restriction on the maximum number of shareholders, transfer of shares and acceptance of public deposits. The liability of each shareholder is limited to the extent of the unpaid amount of the shares face value and the premium thereon in respect of the shares held by him. However, the liability of a Director / Manager of such a Company can at times be unlimited. The minimum number of shareholders is 7.



MINIMUM REQUIREMENT OF PUBLIC LIMITED COMPANY:


1.        Minimum 7 shareholders.

2.       There is no restriction of maximum number of members in a Public Company.

3.       Minimum 3 directors (The shareholders can be a directors).

4.       Maximum number of directors in a Public Company 15. It may appoint more than 15 directors by passing special resolution

5.       DIN (Director Identification Number) for all the Directors

6.       DSC (Digital Signature Certificate) for one of the Directors


PROCEDURE FOR INCORPORATION OF PUBLIC LIMITED COMPANY:


1. Obtain Digital Signature Certificate (DSC)  


Obtain a Digital Signature Certificate from authorized DSC issuing authority.


2. Obtain DIN (director identification number)  


DIN is a unique identification number allotted to an individual who is an existing director of the   company or intends to be appointed as director of a company. DIN is an 8 digit number. For example: 01234567.

This is allotted by Ministry of Corporate Affairs. This can be obtained by making an application on the MCA portal in Form DIR - 3. A Public company must have at least 3 directors.


3. Proposing the name of the Company and find out its availability from the ROC.


Promoters may propose up to six names for the proposed company and secure the name availability by making an application to the Registrar of Companies of the State in which they want to have the proposed company incorporated. The application is required to be made in Form INC -1.

The proposed name, if made available to the applicant, shall be reserved for sixty days from the date on which application for reservation was made. If, the proposed company has not been incorporated within such period, the name shall be lapsed and will be available for other applicants.


4. Submission of final documents

On getting the company name approved we need to submit final documents to the ROC. The office ROC will scrutinize the incorporation documents. If the documents are found in order, the Company will be registered and the Certificate of Incorporation will be issued by the Registrar.


ADVANTAGES AND DISADVANTAGES OF PUBLIC LIMITED COMPANY


Advantages

  • -           There is limited liability for the shareholders.
  • -          The business has separate legal entity.
  • -          There is continuity even if any of the shareholders die.
  • -          These businesses can raise large capital sum as there is no limit to the number of shareholders.
  • -          The shares of the business are freely transferable providing more liquidity to its shareholders.
  • -          Unity of direction
  • -          Efficient management


Disadvantages

  • -                There is lot of legal formalities required for forming a public limited company. It is costly and time consuming.
  • -           In order to protect the interest of the ordinary investor there are strict controls and regulations to comply.
  • -           These companies have to publish their accounts.
  • -           Public Limited companies are huge in size and may face management problems such as slow decision making and             industrial relations problems.
  • -           Subjected to strict regulations


Article By:

Rahul Chaudhary

Team OnlineCompany