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Discover the process to register a Public Limited Company in India. Learn about the benefits, including limited liability and opportunities to raise funds through bank loans, public offerings, and institutional investors. Understand the difference between unlisted and listed companies on the Stock Exchange.
5 May 2024
Afinthrive Advisory
A public limited company has many advantages over Private Limited Company and the ability to have any number of members, ease in transfer of shareholding and more transparency makes it popular amongst foreign investors. If you are planning to raise funds from the public through Initial Public Offer (IPO) then Start your business by incorporating Public Limited Company.
A public limited company is usually established to generate capital from external sources, i.e. the general public for starting a business, business expansion, technological advancement, global expansion, etc.
But a PLC is suitable to the large organizations which have a comprehensive perspective and higher growth possibilities, rather than a small shop located next door.
Key Points to Remember :
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Points to make your decision easy
Since the registration procedure of a company is entirely online, a digital signature will be required for filing the forms on the MCA portal. For all proposed directors as well as the subscribers of the memorandum and articles of association, DSC is compulsory
Digital Signature Certificate (DSC)
DIN is an identification number concerning a director; it has to be procured by anyone who intends to become a director in a company. DIN of a proposed director in addition to the name and address proof has to be mentioned in the company registration form.
Director Identification Number (DIN)
A completed SPICe+ form has to be submitted on the MCA portal in order to apply for company registration. To fill the SPICe+ form and submit the required documents, the director of a company needs to register on the MCA portal. After the registration process is completed, the director will get access to the MCA portal services which comprises filing e-forms as well as viewing public documents.
Registration on the MCA Portal
After the registration application is submitted along with the concerned documents, the Registrar of Companies (ROC) will inspect the application. After the application is verified, he will issue the Certificate of Incorporation of the Public Company. After obtaining the certification of incorporation from the ROC, the company should apply for the ‘Certificate of business commencement’ also.
Certificate of Incorporation
All you should know about PPL
One of the primary advantages of forming a PLC is the ability to raise capital by offering shares to the public through an initial public offering (IPO) on a stock exchange. This provides access to a broad pool of investors and capital, enabling the company to fund expansion, invest in new projects, and pursue growth opportunities
Being a publicly traded company can enhance credibility with customers, suppliers, investors, and other stakeholders. The stringent regulatory requirements and transparency associated with PLCs can instill confidence and trust in the company’s operations and financial reporting.
Shares of PLCs are traded on stock exchanges, providing liquidity to shareholders. Investors can easily buy and sell shares, offering flexibility and an exit strategy. This liquidity can also attract investors who may be hesitant to invest in privately held companies due to concerns about liquidity.
PLCs can offer stock options, share-based incentive schemes, or employee stock purchase plans to employees. This enables the company to attract and retain talent by providing opportunities for ownership and participation in the company’s success.
Access to capital and public markets can facilitate mergers, acquisitions, and strategic partnerships. PLCs can use their stock as currency for acquisitions, enabling them to pursue growth and expansion strategies.
Being a publicly traded company can increase brand visibility and awareness among investors, customers, and the general public. This visibility can enhance the company’s reputation and competitive positioning in the market.
Publicly traded companies are subject to market forces and investor sentiment, which can lead to increases in stock price and valuation over time. This can benefit shareholders and provide opportunities for capital appreciation.
Going public provides an exit strategy for existing shareholders, including founders, venture capitalists, and early investors. They can monetize their investment through the sale of shares on the public market, providing liquidity and realizing returns on their investment.
Publicly traded shares can be used as currency for acquisitions, enabling PLCs to pursue strategic acquisitions and consolidate their industry position.
PLCs are subject to stringent corporate governance standards and regulatory oversight, which can promote transparency, accountability, and ethical business practices.
Here is the check list of documents required.
Get Answers to your most asked questions.
A public limited company is a type of business entity that offers shares to the public and is listed on a stock exchange. It has limited liability and is governed by corporate laws and regulations.
Unlike a private limited company, a PLC can offer shares to the public and is listed on a stock exchange. It has a wider pool of shareholders and is subject to stricter regulatory requirements.
Incorporating a PLC typically requires documents such as a memorandum of association, articles of association, director identification numbers (DINs) for directors, digital signature certificates (DSCs), and registration with the relevant regulatory authority.
Ownership in a PLC is represented by shares, which are freely transferable. Shareholders elect the board of directors to manage the company on their behalf.
Advantages of forming a PLC include access to capital through public offerings, enhanced credibility with investors and stakeholders, liquidity of shares, and growth opportunities through mergers, acquisitions, and strategic partnerships.
Disadvantages of forming a PLC include higher regulatory compliance costs, shareholder pressure to meet short-term financial goals, potential loss of control by founders or original shareholders, and market volatility affecting stock prices.
Corporate governance in a PLC is overseen by a board of directors elected by shareholders. The board is responsible for making strategic decisions, ensuring compliance with laws and regulations, and protecting the interests of shareholders.
PLCs are required to disclose extensive information to shareholders and regulatory authorities, including financial statements, annual reports, quarterly reports, and information about significant corporate events.
Yes, anyone can invest in a PLC by purchasing shares on the stock exchange. However, investors should conduct thorough research and consider factors such as the company’s financial performance, growth prospects, and industry dynamics before investing.
A PLC can be delisted from the stock exchange through voluntary delisting or regulatory action. Voluntary delisting occurs when the company decides to withdraw its shares from the exchange, while regulatory delisting may occur due to non-compliance with listing requirements or financial distress.
A Public Limited Company must have a minimum of three directors.
