Legal Definition and Features

The Companies Act, 2013 provides a precise definition of a Public Limited Company in Section 2(71). This section lays down the essential characteristics that distinguish a public company from a private company. Each feature carries a specific legal implication to ensure transparency, accountability, and investor protection.

Not a Private Company

A public company is essentially defined in opposition to a private company. Unlike a private company, it does not restrict the transfer of shares, does not limit the number of members to 200, and is not prohibited from inviting the public to invest. This makes it more open and suitable for raising funds from external sources.

Minimum of Seven Members

For incorporation, a public company must have at least seven members/shareholders. This statutory requirement ensures that public companies have a broader base of ownership from the very beginning, unlike private companies which can be incorporated with just two members.

Free Transferability of Shares

One of the hallmarks of a public company is the freedom to transfer shares. Shareholders can sell or transfer their shares without seeking prior approval from other members or directors (subject to SEBI and listing regulations, if listed). This feature provides liquidity to investors and facilitates participation of a large number of shareholders.

Invitation to the Public to Subscribe to Shares

A public company has the legal right to invite the public to subscribe to its securities (shares, debentures, bonds, etc.). This provision enables it to raise large-scale capital through Initial Public Offerings (IPOs), follow-on offers, and other public fundraising methods. Such rights are strictly prohibited for private companies, highlighting the key difference between the two structures.

Subsidiary of a Public Company

The Act further clarifies that a subsidiary of a public company is deemed to be a public company, even if its own Articles of Association classify it as a private company. This rule ensures that the compliance obligations and public interest safeguards applicable to public companies extend to their subsidiaries as well, preventing misuse of the corporate structure to evade regulatory requirements.

Minimum Requirements for Registration

Before a Public Limited Company (PLC) can be incorporated in India, the Companies Act, 2013 prescribes certain minimum statutory requirements related to members and directors. These ensure that the governance structure is broad-based and capable of serving public interest.

Members and Directors

• Minimum Members: 7
  A PLC must have at least seven shareholders (members) at the time of incorporation. Unlike private companies which require only two, the higher threshold reflects the broader ownership base expected in public entities.

• Maximum Members: No Limit
  There is no ceiling on the number of shareholders a PLC can have. This allows public companies to raise unlimited capital from the public through shares.

• Minimum Directors: 3
  At least three directors are required for effective board governance. This is higher than the minimum of two for a private company, ensuring collective decision-making.

• Maximum Directors: 15
  By default, the Act allows up to fifteen directors. However, the number can be increased beyond fifteen by passing a special resolution in the general meeting [Section 149(1)(b)].

• Resident Director Requirement [Section 149(3)]
  Every company must have at least one director who has resided in India for not less than 182 days in the previous calendar year. This ensures regulatory oversight and domestic accountability.

Additional Director Requirements

• Independent Directors [Section 149(4)]
  In the case of a listed public company, at least one-third of the total board must be independent directors.

  • These directors are not promoters or related to management.

  • Their role is to provide unbiased oversight, protect minority shareholders, and ensure good governance.

• Woman Director [Rule 3, Appointment and Qualification of Directors Rules, 2014]
  Certain classes of public companies are mandated to appoint at least one woman director. This applies to:

  • Listed companies.

  • Public companies with paid-up share capital of ₹100 crore or more, or turnover of ₹300 crore or more.
    This rule is aimed at promoting gender diversity and balanced representation on corporate boards.

Name Approval

Choosing a company name is the first step in the incorporation process. Since the name becomes the company’s identity and brand, the Companies Act, 2013 and the Companies (Incorporation) Rules, 2014 impose strict guidelines to ensure uniqueness, legality, and public transparency.

Mandatory Use of “Limited”

• Every public company must end its name with the word “Limited”.

• This suffix reflects the legal nature of the entity, i.e., shareholders’ liability is limited only to the unpaid value of their shares.

• It also differentiates a PLC from other structures such as a Private Limited Company (Pvt Ltd) or Limited Liability Partnership (LLP).

Legal Provisions – Rule 8 & 8A

• Rule 8: A proposed name will be rejected if it is undesirable, meaning:

  • It is identical or too similar to an existing company.

  • It contains words or expressions offensive, misleading, or restricted by law.

  • It suggests government patronage (e.g., “National,” “Commission,” “Governor”) without approval.

  • It includes regulated terms such as “Bank,” “Insurance,” “Stock Exchange,” without consent from RBI, IRDAI, or SEBI.

• Rule 8A: The Registrar also cross-checks the proposed name against the Trademark Registry.

  • If identical or deceptively similar to a registered trademark, the applicant must provide a No Objection Certificate (NOC) or prior approval from the trademark holder.

  • This prevents misuse of established brands and avoids litigation.

Restrictions on Identical or Resembling Names

A name cannot:

• Be identical or deceptively similar to an existing company name.

• Mislead the public about the business activity (e.g., using “Bank” for a company without banking approval).

• Violate intellectual property rights such as trademarks, copyrights, or the Emblems and Names (Prevention of Improper Use) Act, 1950.

• Use generic variations (adding “India,” “Global,” “New”) to create artificial distinctiveness.

Example:

• “Reliens Industries Limited” would be rejected for resembling “Reliance Industries Limited.”

• “Aarna AgroTech Limited” would likely be approved if no similar name exists.

Filing through SPICe+ Part A (MCA V3 Portal)

• The SPICe+ (Simplified Proforma for Incorporating Company Electronically Plus) form is used for name reservation.

• Part A of SPICe+ specifically deals with name approval.

• Applicants may propose two names in order of preference.

• If rejected, the Registrar may allow resubmission with new options.

• Once approved, the name is reserved for 20 days (extendable in certain cases). Within this period, the applicant must proceed to complete incorporation using SPICe+ Part B.

Registration Process of a Public Limited Company

The registration of a Public Limited Company (PLC) in India is governed by the Companies Act, 2013 and executed through the MCA V3 portal. The process is streamlined through the integrated SPICe+ form (INC-32), which combines multiple applications into a single window.

• Digital Signature & DIN: Every proposed director and subscriber must obtain a Digital Signature Certificate (DSC) for secure online filings. Directors also require a Director Identification Number (DIN), which can be allotted through SPICe+ Part B at incorporation. These two are mandatory identification tools for authenticating company incorporation documents.

• SPICe+ (INC-32) Filing: The SPICe+ form simplifies incorporation through two parts. Part A reserves the company name, while Part B captures details of directors, subscribers, capital, and office. The e-MoA (INC-33) and e-AoA (INC-34) are attached electronically, ensuring incorporation without traditional paperwork. This step legally establishes the company.

• Linked Forms: Several linked forms must be filed with SPICe+. AGILE-PRO-S enables registrations like GSTIN, EPFO, ESIC, Profession Tax, and bank account. INC-9 generates directors’ and subscribers’ declarations of compliance. If the registered office is not finalized at incorporation, INC-22 must be filed within 30 days with address proof and owner’s NOC.

• Post-Incorporation Compliances: After incorporation, a PLC must file INC-20A within 180 days to declare commencement of business and confirm subscription money receipt. Additionally, as per Section 56(4), share certificates must be issued within two months of allotment. These steps ensure compliance before the company begins operations or raises funds.

Fees for Registration

ROC Filing Fees

The Registrar of Companies (ROC) filing fees are prescribed under the Companies (Registration Offices and Fees) Rules, 2014. These fees are charged on a slab basis, depending on the authorised share capital of the company. For example, companies with authorised capital up to ₹10 lakh pay a lower fee, while those with higher authorised capital fall into progressively higher slabs. These fees cover incorporation forms such as SPICe+ (INC-32), e-MoA (INC-33), and e-AoA (INC-34).

Stamp Duty

Apart from ROC fees, stamp duty is levied on incorporation documents such as the Memorandum of Association (MoA), Articles of Association (AoA), and SPICe+ forms. The rate of stamp duty varies from state to state, since each state government prescribes its own rates under the Indian Stamp Act, 1899. The duty is automatically calculated by the MCA system at the time of filing, based on the company’s registered office location.

Other Expenses

In addition to statutory fees, certain incidental costs are borne by the promoters. These include the cost of obtaining Digital Signature Certificates (DSCs) for directors and subscribers, professional charges paid to company secretaries, chartered accountants, or legal experts assisting in incorporation, and miscellaneous expenses such as notary attestation, document preparation, or couriering of papers, if required.

Legal Rules and Compliance

Meetings and Records

A Public Limited Company must conduct an Annual General Meeting (AGM) each year as mandated under Section 96 of the Companies Act, 2013. The AGM ensures shareholder participation in approving accounts, dividends, and director appointments. Additionally, the Board of Directors must hold a minimum of four Board Meetings every year, with not more than 120 days between two meetings [Section 173]. The company is also required to maintain minutes of all meetings in line with Secretarial Standards SS-1 (Board Meetings) and SS-2 (General Meetings) issued by ICSI, ensuring transparency and proper record-keeping.

Appointment of Key Managerial Personnel (KMP)

As per Section 203, every listed company and every public company with paid-up share capital of ₹10 crore or more must appoint Key Managerial Personnel. These include a Managing Director (MD) or Chief Executive Officer (CEO) or Whole-Time Director (WTD), along with a Chief Financial Officer (CFO) and a Company Secretary (CS). Appointment of KMP strengthens corporate governance by ensuring that financial, operational, and compliance matters are handled by qualified professionals.

Audit and Compliance

Every PLC must undergo a Statutory Audit annually under Section 139, where auditors are appointed to examine and report on financial statements. Certain public companies are also required to conduct an Internal Audit under Section 138, especially listed companies and large unlisted ones meeting prescribed thresholds of capital, turnover, or borrowings. Additionally, Secretarial Audit under Section 204 is compulsory for all listed companies and for public companies with paid-up capital of ₹50 crore or more or turnover of ₹250 crore or more, to verify compliance with company law and allied regulations.

Financial Statements and Annual Filings

A Public Limited Company must file its financial statements (AOC-4) under Section 137 and its Annual Return (MGT-7) under Section 92 within the prescribed timelines. Form ADT-1 must be filed for the appointment of auditors, while Form DPT-3 is required for reporting deposits and exempted borrowings. Additionally, Form MSME-1 is filed to disclose outstanding payments to micro and small enterprises. These filings are mandatory to ensure regulatory oversight and safeguard stakeholder interests.

Capital and Securities Rules

A Public Limited Company is distinct from other company structures because it has the legal right to raise capital from the public. To protect investors and maintain transparency, its capital-raising activities are regulated under the Companies Act, 2013, allied rules, and SEBI regulations.

Prospectus and Public Issue

When a PLC raises funds from the public, it must issue a prospectus governed by Chapter III of the Companies Act, 2013. The prospectus contains key disclosures such as objectives, risk factors, and financial details, ensuring investors can make informed decisions. Public offers (IPO, FPO, or further public issues) are also subject to SEBI (Issue of Capital and Disclosure Requirements) Regulations, 2018 (ICDR), which prescribe norms for eligibility, pricing, disclosures, and allotment. These provisions make public fundraising transparent and fair.

Private Placement and Rights Issue

Not all fundraising involves a public offer. Companies can raise capital through Private Placement (offering securities to a select group of investors) and Rights Issue (offering shares to existing shareholders in proportion to their holdings). These are governed by the Companies (Prospectus and Allotment of Securities) Rules (PAS Rules) and the Companies (Share Capital and Debentures) Rules (SH Rules). While simpler than a public issue, these routes also carry compliance requirements, such as filing return of allotment in Form PAS-3.

Dematerialisation of Shares

To promote transparency and curb misuse of physical share certificates, Rule 9A of the Companies (Prospectus and Allotment of Securities) Rules, 2014 mandates that all unlisted public companies issue and transfer shares only in dematerialised form. This requires obtaining an ISIN (International Securities Identification Number) and linking with a depository (NSDL/CDSL). Further, such companies must file a half-yearly reconciliation statement in Form PAS-6, certifying that their share capital records match with those of the depositories.

Deposits and Borrowings

A Public Limited Company has access to deposits and borrowings for funding its operations, but these are tightly regulated under the Companies Act, 2013 to safeguard investor interests and maintain financial discipline.

Section 73 – Deposits from Members

A PLC may accept deposits from its members (shareholders), but only under prescribed conditions. The company must issue a circular to members, file it with the Registrar of Companies, maintain a deposit repayment reserve account (minimum 20% of deposits maturing in the next financial year), and obtain deposit insurance where required. Additionally, it must ensure proper disclosure of financial position and credit rating before accepting such deposits. These safeguards ensure that member deposits are secure and repayable within the agreed time frame.

Section 76 – Deposits from the Public (Eligible Companies)

Not all PLCs can accept public deposits. Only “eligible companies” are allowed, i.e., public companies with a net worth of at least ₹100 crore or a turnover of at least ₹500 crore. Such companies may accept deposits from the general public, but they must comply with stricter rules, including obtaining a credit rating, maintaining a deposit repayment reserve, and filing returns with the Registrar. This provision ensures that only financially strong companies handle public deposits, minimizing the risk of default.

Section 180 – Restrictions on Borrowings

Under Section 180(1)(c), a PLC’s Board of Directors requires approval through a special resolution of shareholders to borrow money where the total borrowings exceed the aggregate of paid-up share capital, free reserves, and securities premium. This provision acts as a check on excessive leverage by requiring shareholder consent for major borrowing decisions, ensuring transparency and protecting stakeholder interests.

Recent Updates

Dematerialisation Rule – Extension to Private Companies

Earlier, only unlisted public companies were mandated under Rule 9A of the Companies (Prospectus and Allotment of Securities) Rules, 2014 to issue and transfer shares only in dematerialised form, along with filing Form PAS-6 for reconciliation. From October 2023, the Ministry of Corporate Affairs introduced Rule 9B, extending similar requirements to private companies as well. This means both public and private companies must now maintain their shares in demat form, bringing uniformity, improving transparency, and reducing risks of forgery or manipulation associated with physical share certificates.

SEBI Amendments 2024–25 – Stricter Governance Norms

In 2024–25, the Securities and Exchange Board of India (SEBI) introduced stricter governance requirements for listed companies and even for debt-listed public companies. These amendments enhanced disclosure obligations, tightened rules on related-party transactions, and strengthened the role of independent directors and board committees. For debt-listed entities, SEBI prescribed greater transparency in financial reporting and investor protection measures, signaling its focus on raising governance standards across both equity and debt markets.

MCA V3 Portal Enhancements – Streamlined Incorporation

The MCA V3 portal has undergone major technological upgrades to simplify company incorporation and compliance filings. One significant improvement is the integration of SPICe+ with AGILE-PRO-S, allowing companies to simultaneously apply for incorporation, PAN/TAN, GSTIN, EPFO, ESIC, Profession Tax (in some states), and even bank account opening in a single online application. This integration reduces duplication, speeds up processing, and provides a seamless “one-stop” compliance experience for new companies.

Conclusion

A Public Limited Company (PLC) stands out as one of the most structured and heavily regulated forms of business in India. Its ability to raise capital from the public through shares and debentures makes it attractive for large-scale ventures, but this opportunity comes with the responsibility of adhering to a strict compliance framework.

From the very beginning, every stage whether it is name approval, incorporation through SPICe+, appointment of directors, or post-incorporation requirements must comply with the Companies Act, 2013, allied MCA Rules, and, in the case of listed companies, SEBI Regulations. Rules such as mandatory dematerialisation of shares (Rule 9A), appointment of independent and woman directors, conducting annual general meetings, and filing statutory returns (AOC-4, MGT-7, DPT-3, MSME-1) ensure that transparency and accountability are maintained.

For entrepreneurs, this means that while a PLC opens doors to public fundraising, enhanced market credibility, and business expansion, it also demands robust governance and continuous compliance. Successfully meeting these obligations not only prevents regulatory penalties but also builds trust with investors, stakeholders, and the wider market, ensuring sustainable and credible growth.

Frequently Asked Questions (FAQs)

Q1. What is a Public Limited Company under the Companies Act, 2013?

Ans. A Public Limited Company (PLC) is defined under Section 2(71) of the Companies Act, 2013 as a company that is not a private company, has a minimum of 7 members, allows free transferability of shares, and may invite the public to subscribe to its securities.

Q2. How many members and directors are required to register a Public Limited Company?

Ans. At least 7 members (shareholders) and 3 directors are required to form a Public Limited Company. There is no maximum limit on members, while the maximum number of directors is 15 (extendable by special resolution). One director must be a resident in India.

Q3. What is the process of registering a Public Limited Company?

Ans. The process includes:

• Obtaining Digital Signature Certificates (DSC) and Director Identification Numbers (DIN).

• Filing SPICe+ (INC-32) for incorporation, including e-MoA (INC-33) and e-AoA (INC-34).

• Submitting linked forms like AGILE-PRO-S, INC-9, and INC-22.

• Filing INC-20A for commencement of business after incorporation.

Q4. What are the compliance requirements of a Public Limited Company?

Ans. Key compliances include:

• Holding AGMs and at least 4 board meetings per year.

• Appointing KMP such as MD/CEO/WTD, CFO, and CS (for larger PLCs).

• Conducting statutory, internal, and secretarial audits.

• Filing statutory forms like AOC-4, MGT-7, ADT-1, DPT-3, and MSME-1.

Q5. Can a Public Limited Company accept deposits from the public?

Ans. Yes, but only eligible public companies with a net worth of at least ₹100 crore or turnover of ₹500 crore can accept deposits from the public under Section 76. Other public companies may accept deposits only from their members under Section 73.

Q6. What are the rules for issuing shares in a Public Limited Company?

Ans. A PLC can issue shares through:

• Public issue (governed by Chapter III of the Companies Act and SEBI ICDR Regulations).

• Rights issue or private placement (governed by PAS Rules and SH Rules).

• All unlisted public companies must issue and transfer shares only in dematerialised form under Rule 9A, with mandatory filing of PAS-6.

Q7. Why is a Public Limited Company considered highly regulated?

Ans. Because it can raise funds from the public, a PLC is subject to stricter rules on directors’ qualifications, audits, shareholder meetings, dematerialisation of shares, and continuous disclosures. This ensures transparency, accountability, and investor protection.

Q8. Who should choose a Public Limited Company structure?

Ans. Entrepreneurs and businesses aiming for large-scale operations, public fundraising, or listing on stock exchanges should choose a PLC. It provides unlimited growth potential but requires strict compliance with the Companies Act, MCA Rules, and SEBI Regulations.