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Public Limited Company

Introduction:

A Public Limited Company (PLC) is a type of business structure in India that allows a company to raise capital from the public through the issuance of shares. PLCs are considered more credible and professional than other business structures and are subject to stricter regulations and compliance requirements.

Features:

  • The minimum number of shareholders required to form a PLC is seven.

  • The minimum number of directors required to form a PLC is three.

  • PLCs must have a minimum paid-up capital of INR 5 Lakhs.

  • PLCs must have the last word "Limited" in its name.

  • PLCs are required to comply with certain annual formalities, such as filing annual returns and financial statements.

  • PLCs have to mandatorily have at least 3 directors and 2 of them have to be independent directors.

  • PLCs are required to have an auditor appointed within 30 days of incorporating the company.

  • PLCs are required to hold annual general meetings (AGM) and file annual returns.

  • PLCs have to mandatorily have a company secretary.

 

Procedures:

  • Obtain Director Identification Number (DIN) and Digital Signature Certificates (DSC) for all the directors through the Ministry of Corporate Affairs (MCA) website.

  • File the e-forms such as SPICe (Simplified Proforma for Incorporating Company Electronically), along with the necessary documents such as Memorandum of Association (MOA) and Articles of Association (AOA), along with the required fees to the Registrar of Companies (ROC).

  • Obtain the certificate of incorporation from ROC, which serves as the official registration of the PLC.

  • Obtain PAN and TAN for the company and open a bank account in the company's name.

  • Get the company's common seal affixed and get the company's shares certified by a practicing company secretary

 

Documents Required:

  • DIN and DSC of the proposed directors

  • Proof of identity and address of the proposed directors (such as PAN card, passport, driving license, voter ID, or utility bill)

  • Memorandum of Association (MOA) and Articles of Association (AOA)

  • NOC (No Objection Certificate) from the owner of the proposed registered office address

  • Affidavit from the proposed directors, stating that they are not disqualified from being appointed as directors

  • Declaration by the proposed directors, that the company is not a subsidiary of any other company

  • Estimate of the company's projected turnover for the next three financial years

  • Other documents as required by ROC

  • A declaration of compliance with the Companies Act, 2013

  • A statement of adherence to the secretarial standards

 

Advantages:

  • Ability to raise capital from the public through the issuance of shares.

  • Separation of ownership and management: Shareholders are not involved in the day-to-day management of the company and have limited liability.

  • Limited liability protection for shareholders: Shareholders' liability is limited to the amount of capital they have invested in the company.

  • Greater credibility and professionalism: PLCs are considered more credible and professional than other business structures, which can help to attract more customers and business partners.

  • Ease of transferring ownership through the sale of shares: PLCs can easily transfer ownership through the sale of shares, which can be beneficial for succession planning.

 

Disadvantages:

  • Strict compliance requirements: PLCs are subject to stricter regulations and compliance requirements than other business structures, which can be costly and time-consuming.

  • Increased regulatory oversight: PLCs are subject to increased regulatory oversight, which can be burdensome and may lead to delays in decision-making.

  • Higher costs associated with formation and maintenance: PLCs have higher formation and maintenance costs than other business structures.

  • Potential for conflicts between shareholders and management: PLCs may have conflicts between shareholders and management, which can lead to disagreements and potential legal disputes.

 

Difference Between a Private Limited Company and with Public Limited Company

  1. Shareholders: A PLC can have an unlimited number of shareholders, while a Pvt Ltd can have a maximum of 200 shareholders.

  2. Minimum Shareholders: A PLC must have at least seven shareholders, while a Pvt Ltd must have at least two shareholders.

  3. Minimum Capital: A PLC must have a minimum paid-up capital of INR 5 Lakhs, while a Pvt Ltd has no minimum paid-up capital requirement.

  4. Fundraising: PLC can raise funds from the public through the issuance of shares, while a Pvt Ltd can't raise funds from the public.

  5. Compliance: A PLC is subject to stricter regulations and compliance requirements than a Pvt Ltd, which can be costly and time-consuming.

  6. Listing: A PLC can list its shares on the stock exchange and can raise funds through the capital market, while a Pvt Ltd cannot list its shares on the stock exchange.

  7. Name: PLC must have the last word "Limited" in its name, while a Pvt Ltd must have the last word "Private Limited" in its name.

  8. Directors: A PLC must have at least three directors and two of them have to be independent directors, while a Pvt Ltd must have at least two directors.

  9. AGM: A PLC must hold an annual general meeting (AGM) and file annual returns, while a Pvt Ltd is required to hold AGM only if specified in its articles of association

  10. Secretary: A PLC must mandatorily have a company secretary, while a Pvt Ltd is not required to have one.

 

Conclusion

A Public Limited Company (PLC) and a Private Limited Company (Pvt Ltd) are two different forms of business structure in India. A PLC allows a company to raise capital from the public through the issuance of shares, has a minimum number of shareholders of seven, must have a minimum paid-up capital of INR 5 Lakhs, and must have the last word "Limited" in its name. It is also subject to stricter regulations and compliance requirements and has to mandatorily have an auditor appointed and a company secretary. A Pvt Ltd, on the other hand, has a maximum number of shareholders of 200, has no minimum paid-up capital requirement, and must have the last word "Private Limited" in its name. It is subject to less compliance requirements and has no mandatory requirement of an auditor and a company secretary. Both forms of business have their own pros and cons, it's always a good idea to consult with a professional before starting a business or for any specific advice. An experienced professional can guide you through the process of registration and compliance, and help you to make the best decision for your business.​

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