A Public Limited Company (PLC) is a company structure that offers shares to the public, allowing any individual or institution to become a shareholder. These companies are typically large-scale businesses with substantial capital and aim to raise funds from the public through share issuance. A public company in India must comply with stringent regulatory and disclosure norms as per the Companies Act, 2013, and is monitored by the Securities and Exchange Board of India (SEBI) if listed on a stock exchange.

Public Company Registration in India is a formal process that enables companies to raise capital from the public, establish credibility, and expand operations. A Public Limited Company (PLC) is a popular business structure, especially for medium to large-scale enterprises that seek to scale operations through public funding and offer shares on the stock market.

This GrowthX Article by CA Manish Mishra provides an in-depth overview of Public Company Registration in India, including its benefits, eligibility, registration steps, compliance requirements, and more.

Features of a Public Limited Company

Key features of a public company include:

• Separate Legal Entity: A public company operates as a distinct legal entity from its shareholders.
• Limited Liability: Shareholders have limited liability, restricted to the amount they invest.
• Transferability of Shares: Shares are freely transferable, promoting liquidity.
• Minimum Directors and Shareholders: A minimum of three directors and seven shareholders is required.
• Public Listing: Public companies can be listed on a stock exchange, allowing public share ownership.

Benefits of Registering a Public Company

Registering as a public limited company offers numerous benefits, including:

• Access to Public Capital: Public companies can raise significant capital from the general public and institutional investors.
• Enhanced Credibility: Being publicly registered improves company credibility and trustworthiness.
• Perpetual Succession: The company continues even if ownership or leadership changes.
• Expansion Opportunities: With access to public funds, public companies can scale operations and expand more easily.
• Market Visibility: Listing on a stock exchange boosts brand visibility and market presence.

Eligibility Criteria

To register as a public company in India, certain eligibility criteria must be met:

• Minimum Shareholders: At least seven shareholders are required to start a public company.
• Minimum Directors: The company must have at least three directors, with at least one being an Indian resident.
• Registered Office: A physical registered office address in India is required.
• Unique Name: The company name must be unique and should not infringe upon any existing trademarks.

Types of Public Companies

There are two main types of public limited companies in India:

• Listed Public Companies: These companies are listed on stock exchanges and can issue shares to the public.
• Unlisted Public Companies: These companies do not trade on stock exchanges but still operate with the characteristics of a public company.

Documents Required

The following documents are required to register a public company in India:

• Identity Proof: PAN card for Indian nationals and passport for foreign directors.
• Address Proof: Aadhaar card, passport, or voter ID for directors and shareholders.
• Registered Office Address Proof: Rental agreement or ownership document, along with a utility bill.
• Digital Signature Certificate (DSC): Required for all directors for document authentication.
• Director Identification Number (DIN): DIN for each director.

Step-by-Step Process

Step 1: Obtain Digital Signature Certificate (DSC)

A Digital Signature Certificate (DSC) is required for all directors to digitally sign documents for online submission.

Step 2: Apply for Director Identification Number (DIN)

A DIN is a unique identification number assigned to directors, which can be obtained through the SPICe+ form.

Step 3: Reserve Company Name with RUN

The Reserve Unique Name (RUN) service on the MCA portal allows applicants to reserve a unique company name, subject to approval by the Registrar of Companies (RoC).

Step 4: Draft MoA and AoA

The Memorandum of Association (MoA) and Articles of Association (AoA) must be prepared, outlining the company’s objectives and rules for management.

Step 5: File SPICe+ Form for Registration

The SPICe+ Form (Simplified Proforma for Incorporating Company Electronically) is an integrated form for company registration. Submit it along with required documents and fees.

Step 6: Obtain Certificate of Incorporation

Upon approval, the RoC issues a Certificate of Incorporation, signifying the legal formation of the company.

Role and Responsibilities of Directors

Directors in a public company hold significant responsibilities, including:

• Statutory Compliance: Ensuring the company meets its legal obligations under the Companies Act and SEBI guidelines.
• Fiduciary Duty: Acting in the best interests of shareholders and avoiding conflicts of interest.
• Decision-Making: Managing day-to-day business activities and strategic decision-making.
• Reporting Obligations: Filing accurate financial statements and disclosures with regulatory bodies.

MoA and AoA of Public Companies

The Memorandum of Association (MoA) outlines the company's objectives and core purpose, while the Articles of Association (AoA) define the rules and regulations for internal management. These documents serve as the foundation for the company’s operations and are legally binding on the company and its shareholders.

IPO for Public Companies

Public companies can raise capital by issuing shares through an Initial Public Offering (IPO). The IPO process includes:

• Preparation of a Prospectus: Detailing the business, objectives, financial statements, and investment risks.
• Approval from SEBI: The company must meet SEBI’s eligibility criteria to list on a stock exchange.
• Allotment of Shares: Shares are offered to the public, and successful subscribers receive shares once the IPO is complete.

Compliance Requirements

Public companies have stringent compliance requirements, including:

• Annual General Meetings (AGM): Must be held yearly for shareholders to review the company’s performance.
• Annual Return Filing: Submit the annual return (Form MGT-7) and financial statements.
• Board Meetings: Hold regular board meetings to discuss and make key decisions.
• Disclosure Requirements: Public companies must disclose material information to the public, maintaining transparency.

Non-compliance can result in penalties, legal issues, and a loss of shareholder trust.

Difference Between Public and Private Companies

FAQs on Public Company Registration

What is the minimum number of directors required for a public company?

A public company requires a minimum of three directors.

Can a public limited company be listed on multiple stock exchanges?

Yes, a public company can be listed on multiple exchanges to reach a broader investor base.

Is there a minimum capital requirement for public company registration?

Yes, a minimum paid-up capital of INR 5 lakh is required.

What are the main compliance requirements for a public company?

Compliance includes annual filing, board meetings, AGMs, and regular disclosures.

Can a public company convert back into a private company?

Yes, through shareholder approval and regulatory processes, a public company can convert to private status.

GenZCFO Advice

A Public Company Registration is ideal for businesses aiming to grow rapidly, attract public investments, and establish credibility in the market. By offering shares to the public and complying with regulatory norms, public companies benefit from a larger pool of capital and increased market presence. For businesses looking to scale their operations and gain public trust, registering as a public limited company in India is a strategic choice that offers long-term growth opportunities. Contact us if you have any query on public company registration in India.