The journey of an entrepreneur starts with the decision of selecting the correct business structure to follow. Taxpotter invites you to the world of business. We appreciate your ideas and help you in selecting the right business structure and provide all technical and legal support.
A public limited company is the best business structure for those who are planning big like opening IT infrastructure or manufacturing plants. An individual going for a public limited company should understand the difference between a private limited company and a public limited company.
A public limited company is a large company that is formed to raise funding from the public through IPO. These companies offer shares for the first time in IPO known as primary offerings and they can also go for secondary offerings based on their requirements. However, secondary offerings can be given only to a particular class of people known as preference shareholders.
As per the definition given by section 2(71) of the Companies Act, 2013 a public company is an entity that does not has a meaning of a private company. Even a subsidiary of a private company is also considered a public company.
The members of a public limited company (PLC) enjoy a limited liability feature. These companies are authorized to sell their shares to the public for raising capital. The shares of such companies can be acquired by anyone through initial public offerings (IPO) or stock exchanges. The PLC has to declare its financial and company status to the general public as per law.
As per the provisions of the company Act, a minimum of 3 directors and 7 shareholders are required to incorporate a public ltd company. However, the maximum number of directors is capped at 15.
The proposed name for the company should not match any existing companies. And all public companies must add ‘Limited’ after the company name. It is denoted as the identity of a public company.
As prescribed under the Companies Act a public limited company is required to have minimum paid-up capital of 5 lakh.
Public ltd companies must issue prospectus. It is issued by companies to the general public. It contains comprehensive statements of work and affairs of the company.
However, private limited companies don’t need to issue prospectus as they cannot invite the public to subscribe to their shares.
All the members can enjoy the limited liability feature. That means the members aren’t personally responsible for any losses of the company for any amount greater than their invested amount.
The application form for registration of public limited company through the official MCA portal.
The applicant must apply for a Digital signature certificate (DSC) and Director Identification Number (DIN) for all the proposed directors. The DSC would provide authenticity for processing the electronic documents. It is a mandatory document.
The DIN is an identification number for the directors.
In the next step, the applicant has checked the availability of the required name by visiting the MCA portal. The proposed name should not match any existing companies.
Once the name is approved the applicant has to fill the SPICe+ form for availing the incorporation certificate. Along with that, the applicant has to file all the required documents such as MOA and AOA. These documents contain the mission, objectives, aim, duties, and responsibilities of the proposed directors.
After all the documents have been submitted and verified by the authorities, the company will receive its certificate of incorporation which contains the CIN (corporate identification number) and date of incorporation.
|Category||public limited company||private limited company|
|Directors||Minimum 3||Minimum 2|
|Members||Minimum 7, maximum – nil||Minimum 2, maximum 200|
|Listing||Can be listed on the stock exchange||No listing|
|Paid-up capital||Minimum Rs 5lakh||No minimum limit|
|Prospectus issuance||Required||Not required|
|Certificate of commencement||Yes||yes|
Please fill this form to start your Business Journey with us