(Features, advantages, steps, documents, cost and time)
It is a form of company where the shares are held by the public. And they can buy and sell shares as they please. The shares are traded on a stock exchange. They are strictly regulated and they must publish their true financial position to the investors and stock holders.
Features of a public limited company
- Separate legal entity
- Minimum 3 directors required
- Minimum 7 shareholders required and maximum members have no limit
- Minimum paid up capital must be 5 lakhs
- Shares are easily transferable
- Can raise fund from public by issuing shares
- Must have PUBLIC LIMITED written after the name
- Owners cannot manage the company
Advantages of a public limited company
- Separate legal entity
- Easy transfer of shares
- Able to raise large capital
- Limited liability
- Ownership is separate from management
- Existence is not affected by the death of any member.
- Huge borrowing capacity
Steps for incorporation of public limited company
- Obtain DSC
- Obtain DIN
- Apply for name of company with 6 preferred names and main objective clause
- Application to ROC with the following:
- FORM INC-12
- FORM INC-7
- Make payment for registration
- Apply for certificate of commencement of business and company incorporation
- EForm-20 contains the declaration of the state of the shares
- Board resolution
- Affidavit from each director stating that the Company has not commenced its Business to ROC
Documents required for incorporation
- Proof of identity (directors): PAN needs to be provided, and passport size photo of each director.
- Proof of residence: A proof of residential address is also required. The following documents can be submitted: Passport, Election Card or Voter Identity Card, Ration Card, Driving License, Electricity Bill, Telephone Bill, and Aadhaar Card.
- Proof of registered office address: proof of valid registered office must be submitted within 30 days of the company’s formation. The following documents can be submitted:
- The registered document of the title of the premises of the registered office in the name of the company; OR
- The notarized copy of lease / rent agreement in the name of the company along with a copy of rent paid receipt not older than one month
- The authorization from the Landlord (Name mentioned in the Electricity Bill or Gas Bill or Water Bill or Property Tax Receipt or Sale Deed) to use the premises by the company as its registered office. This is usually referred to as NOC from Landlord;
- Proof of evidence of any utility service like telephone, gas, electricity, etc. depicting the address of the premises in the name of the owner or document, which is not older than two months.
- There should also be a No Objection Certificate by the landlord for having the registered office in his/her premises and this person must submit his/her identity proof and address proof.
- Proposed company names.
- Proof of identity and address proof of shareholders.
- If shareholder is an institute, a certificate of incorporation of the Body Corporate along with the resolution passed by the Body Corporate to subscribe to the shares of the company under incorporation.
- ROC’S letter indicating the availability of name
Time taken for incorporation
Time taken for incorporation of public limited company is 14-20 working days.
Cost of incorporation
The registration and incorporation cost ranges from INR 37000-40000 (approx).