Public Limited Company
A limited company grants limited liability to its owners and management. Being a public company allows a firm to sell shares to investors this is beneficial in raising capital. A minimum of three Directors are required for establishing a Public Limited Company and it has more stringent regulatory requirements compared to a Private Limited Company.
Public Limited Companies are those types of companies where minimum number of members is seven and there is no cap on the maximum number of members. A public limited company has most of the characteristics of a private limited company. A public limited company has all the advantages of private limited company and the ability to have any number of members, ease in transfer of shareholding and more transparency. Identifying marks of a public limited company are name, number of members, shares, formation, management, directors and meetings, etc.
Public Limited Company Incorporation Process
Step 1: Public Limited Company Incorporation
You can incorporate a Public Limited Company in 14 to 20 days, subject to ROC processing time.
Step 2: Obtaining DSC & DIN
Digital Signature Certificate(DSC) and Director Identification Number(DIN) is required for the proposed Directors of the Public Limited Company. DIN and DSC can be obtained for the proposed Directors within 5 to 7 days.
Step 3: Name Approval
A minimum of one and a maximum of six proposed names must be submitted to the MCA. Subject to availability, naming guidelines and MCA processing time, Name Approval can be obtained in 5 to 7 working days.
Step 4: Company Incorporation
Incorporation documents can be submitted to the MCA along with an application for incorporation. MCA will usually approve the application for incorporation in 5 to 7 days, subject to their processing time.
Frequently Ask Questions (FAQs)
| S.No. | Query |
|---|---|
| 1 | How many people are required to incorporate a Limited Company? |
| To incorporate a Limited Company, a minimum of seven people are required. A Limited Company must have a minimum of three Directors and seven shareholders. | |
| 2 | What are the requirements to be a Director? |
| The Director needs to be over 18 years of age and must be a natural person. There are no limitations in terms of citizenship or residency. Therefore, even foreign nationals can be Directors in a Indian Private Limited Company. | |
| 3 | What is the capital required to start a Limited Company? |
| You can start a Limited Company with any amount of capital. However, fee must be paid to the Government for issuing a minimum of shares worth Rs.5 lakhs [Authorized Capital Fee] during the incorporation of the Company. There is no requirement to show proof of capital invested during the incorporation process. | |
| 4 | Is an office required for starting a Limited Company? |
| An address in India where the registered office of the Company will be situated is required. The premises can be a commercial / industrial / residential where communication from the MCA will be received. | |
| 5 | Do I have to be present in person to incorporate a Limited Company? |
| No, you will not have to be present at our office or appear at any office for the incorporation of a Limited Company. All the documents can be scanned and sent through email to our office. Some documents will also have to be couriered to our office. | |
| 6 | What are the documents required for incorporation? |
| Identity proof and address proof is mandatory for all the proposed Directors of the Company. PAN Card is mandatory for Indian Nationals. In addition, the landlord of the registered office premises must provide a No Objection Certificate for having the registered office in his/her premises and must submit his/her identity proof and address proof. | |
| 7 | How long will it take to incorporate a Company? |
| You can incorporate a Limited Company for in 14-20 days. The time taken for incorporation will depend on submission of relevant documents by the client and speed of Government Approvals. To ensure speedy incorporation, please choose a unique name for your Company and ensure you have all the required documents prior to starting the incorporation process. | |
| 8 | What do I need to quickly incorporate my Company? |
| To incorporate a Company quickly, make sure the proposed name of the Limited Company is very unique. Names that are similar to an existing private limited company / limited liability partnership / trademark can be rejected and additional time will be required for resubmission of names. | |
| 9 | How long is the incorporation of the Company valid for? |
| Once a Company is incorporated, it will be active and in-existence as long as the annual compliances are met with regularly. In case, annual compliances are not complied with, the Company will become a Dormant Company and maybe struck off from the register after a period of time. A struck-off Company can be revived for a period of upto 20 years. | |
| 10 | What is a Digital Signature Certificate? |
| A Digital Signature establishes the identity of the sender or signee electronically while filing documents through the Internet. The Ministry of Corporate Affairs (MCA) mandates that the Directors sign some of the application documents using their Digital Signature. Hence, a Digital Signature is required for all Directors of a proposed Company. | |
| 11 | What is Director Identification Number (DIN)? |
| Director Identification Number is a unique identification number assigned to all existing and proposed Directors of a Company. It is mandatory for all present or proposed Directors to have a Director Identification Number. Director Identification Number never expires and a person can have only one Director Identification Number. | |
| 12 | What is authorized capital fee? |
| Authorized capital of a Company is the amount of shares a company can issue to it shareholders. Companies have to pay the Government an authorized capital fee to issue shares in a Company. Companies have to pay authorized capital fee for a minimum of Rs.5 lakhs. | |
| 13 | What are the statutory compliances required for a Limited Company? |
| A limited company must hold a Board Meeting atleast once in every 3 months. In addition to the Board Meetings, an Annual General Meeting must be conducted by the Private Limited Company, atleast once every year. | |
| 14 | Can NRIs / Foreign Nationals be a Director in a Limited Company? |
| Yes, a NRI or Foreign National can be a Director in a Limited Company after obtaining Director Identification Number. However, atleast one Director on the Board of Directors must be a Resident India. | |
| 15 | Can NRIs / Foreigners hold shares of a Limited Company? |
| Yes, NRIs / Foreign Nationals / Foreign Companies can hold shares of a Limited Company subject to Foreign Direct Investment (FDI) Guidelines. | |
| 16 | What are FDI Guidelines for Foreigners in a Limited Company? |
| 100% Foreign Direct Investment is allowed in India in many of the industries under the Automatic Route. Under the Automatic Route, only a post-investment filing is necessary with the RBI indicating the nature of investment made. There are a few industries that require prior approval from the RBI, in such cases, approval must first be obtained from RBI prior to investment. |
Advantages Of Limited Company
Separate Legal Entity:
A company is a legal entity and a juristic person established under the Act. Therefore a company form of organization has wide legal capacity and can own property and also incur debts. The members (Shareholders/Directors) of a company have no liability to the creditors of a company for such debts.
Uninterrupted Existence:
A company has ‘perpetual succession’, that is continued or uninterrupted existence until it is legally dissolved. A company, being a separate legal person, is unaffected by the death or other departure of any member but continues to be in existence irrespective of the changes in membership.
Borrowing Capacity:
A company enjoys better avenues for borrowing of funds. It can issue debentures, secured as well as unsecured and can also accept deposits from the public, etc. Even banking and financial institutions prefer to render large financial assistance to a company rather than partnership firms or proprietary concerns.
Easy Transferability:
Shares of a company limited by shares are transferable by a shareholder to any other person. Filing and signing a share transfer form and handing over the buyer of the shares along with share certificate can easily transfer shares.
Owning Property:
A company being a juristic person, can acquire, own, enjoy and alienate, property in its own name. No shareholder can make any claim upon the property of the company so long as the company is a going concern.
Limited Liability:
Limited Liability means the status of being legally responsible only to a limited amount for debts of a company. Unlike proprietorships and partnerships, in a limited liability company the liability of the members in respect of the company’s debts is limited.
Capacity to sue and be sued:
To sue means to institute legal proceedings against or to bring a suit in a court of law. Just as one person can bring a legal action in his/her own name against another in that person’s name, a company being an independent legal entity can sue and also be sued in its own name.
Dual Relationship:
In the company form of organization it is possible for a company to make a valid and effective contract with any of tis members. Thus, a person can at the same time be a shareholder, creditor, director and also an employee of the company.
Key Terms:
- Making a Company ,
- Public Limited Company ,
- Public Limited Company Incorporation Process