Introduction
How to start a public limited company is the most common query among users unfamiliar with its statutory structure and provisions. A Public limited company operates under Section 2(71) of the Companies Act, 2013, and at least 7 members & 3 directors are required to incorporate it. Among the three, one director must reside in India for 182 days in the preceding financial year.
The legal structure of the public limited company allows it to offer shares to the general public to raise capital in larger amounts. Furthermore, the structure provides limited liability protection to the owners, growth stability, and easy transferability. Let's dive into this guide to explore what the public limited company registration process is, the documents required to start a PLC, and the eligibility criteria.
What is a Public Limited Company?
A public limited company in India is a business structure that operates under the Companies Act, 2013. Unlike a private limited company, a public limited company (PLC) can offer its shares to the general public. All rules and regulations for the PLC are governed under Section 2(71) of the Companies Act, 2013, and the company name strictly ends with the words "Limited".
The owner in a PLC and the other members hold limited liability protection over their personal assets. It means they are only liable for the money they spend on their shares. The PLC is free to raise capital in larger amounts, but they are required to share the financial records with the general public.
It's worth clarifying here that a company doesn't need to be listed on a stock exchange to qualify as a Public Limited Company. A listed PLC has its shares actively traded on an exchange like the NSE or BSE, which brings it under SEBI's Listing Obligations and Disclosure Requirements (LODR), with additional periodic disclosures on top of the usual ROC filings. An unlisted PLC still carries the same "Limited" structure, the same minimum shareholder and director count, and the same stricter Companies Act compliance, but its shares aren't traded publicly, so SEBI's listing regulations don't apply. In practice, most PLCs incorporated in India start out unlisted and move toward a listing only once they're IPO-ready.
Eligibility Criteria for a Public Limited Company
To register a Public Limited Company in India (PLC), the applicants are first required to meet all the specific requirements. These are the core features that you must meet while applying for the Public Limited Company registration in India.
- Minimum Shareholders: At least 7 members are required to start a public limited company in India. It can be an individual citizen or a legal entity. There is no maximum limit.
- Minimum Directors: To start a PLC, a minimum of 3 directors is required, and the maximum is 15. One director must stay in India for 182 days during the financial year.
- DIN & DSC: Every proposed director of the PLC must have a valid DSC and DIN.
- Minimum Paid-Up Capital Requirement: There is no statutory minimum paid-up capital required to start a PLC in India. Including, the owners can start with any nominal amount fit for their business needs.
- Company Name: The name must align with MCA guidelines. As per the MCA's strict guidelines, the name of the company ends with the suffix "Limited" or "Ltd".
- Registered Office in India: The Public Limited Company in India must have a valid physical address in India. The registered office must be capable of receiving and responding to all statutory requirements.
What Are the Advantages of a Public Limited Company?
The legal framework of a Public Limited Company provides various benefits to the owner of the company. These are the core benefits associated with PLC registration:
- Limited Liability Protection: The personal assets of PLC's shareholders, like cars, houses, and personal money, are safeguarded from the business debts or losses.
- Capital Raising Potential: Unlike a private limited company, the PLC has no limit on the maximum number of shareholders. Further, the PLC can raise funds from the general public by issuing shares. It facilitates capital market access. This route to public markets is strongest once the company completes a listing on a recognised stock exchange; an unlisted PLC can still raise capital from institutional and private investors, just not directly from retail public markets.
- Preference for Institutional Investment: Due to standard governance structures and exit transparency, financial institutions, including venture capital funds, private equity firms, etc prefer to invest in a Public Limited Company (PLC).
- Unrestricted Share Transferability: Under Indian corporate law, a PLC can freely transfer its shares. It means a PLC can transfer, sell, or gift its shares without prior approval from shareholders.
- Builds Trust & Transparency: A legally registered public limited company is subject to strict regulatory checks and mandatory annual compliance formalities overseen by the Ministry of Corporate Affairs (MCA) and SEBI (if listed).
- Perpetual Succession: A Public Limited Company (PLC) is separate from its members and directors. It means it can hold property, borrow money, and enter into legal contracts. Further, the company continues to exist until legally wound up.
What Documents Are Required for PLC Registration in India?
A Public Limited Company is registered through the Ministry of Corporate Affairs (MCA) by using the integrated SPICe+ web form. To file the application form, multiple documents are required, which must be accurate and up to date. Here is the complete list of documents:
- ID proof of directors and shareholders.
- Address proof of directors and shareholders.
- Passport-size photo (recognisable).
- Registered office address proof (if any)
- If the company's place is rented, you'll have to bring an Objection Certificate (NOC) from the renter itself.
- Articles of Association (AOA)
- Memorandum of Association (MOA): for a public limited company, both the MoA and AoA must follow the format prescribed under Table F of Schedule I to the Companies Act, 2013. This is different from private limited companies, which use Table A; a template built for a Pvt Ltd incorporation won't pass ROC scrutiny for a PLC filing.
- Director's PAN card
- Digital signature certificates of the directors and shareholders.
- Directors' Identification.
Documents Required to Open Current Bank Account for PLC
Opening a separate current bank account is crucial for an incorporated Public Limited Company. These are the major documents that you usually require while applying to open a current bank account.
- Certificate of Incorporation issued by ROC
- Memorandum of Association (MoA) and Articles of Association (AoA)
- Company's PAN card
- Registered Office Address Proof
- Board Resolution signed on the company's letterhead
- Complete Details of all directors
- Identity Proof of all authorized signatories & beneficial owners
- Authorized individual address proof
- Signatories' Recent Passport-size photos
- Shareholding Pattern / List of beneficial owners
Public Limited Company Registration Process
The public limited company registration process is followed digitally through the MCA V3 portal by using the SPICe+ web form. Follow this step-by-step process for PLC filing:
Step 1: Apply for Class 3 DSC
All proposed directors and authorised signatories are required to obtain the Class 3 DSC (Digital Signature Certificate). It is used to digitally sign the electronic filing forms on the MCA portal.
Step 2: Company Name Reservation
To reserve the company name, by submitting the SPICe+ Part A on the MCA portal. Before name reservation, it must be ensured that it is unique and not similar to an existing trademark. Further, provide at least two names for reservation along with the business activity.
Step 3: Gather the Incorporation Documents
Draft and finalize the key statutory documents such as MOA and AOA (in the Table F format applicable to public companies), consent, and declarations. With these legal documents, also attach the other supporting documents.
Step 4: File the SPICe+ Part B
Apply for multiple credentials by using the single SPICe+ Part B web form on the MCA portal. In SPICe+ Part B, you can apply for multiple documents such as Certificate of Incorporation (COI), DIN for up to three directors, PAN & TAN, EPFO and ESIC registration (mandatory), opening a Bank Account (AGILE-PRO-S form), etc.
Step 5: Certificate of Incorporation (COI) Issuance
Upon complete verification of documents, the Registrar of Companies (ROC) approves and issues the Certificate of Incorporation (COI) containing the Corporate Identification Number (CIN).
Step 6: File Commencement of Business (INC-20A)
It is a mandatory step, performed after the completion of Public Limited Company Incorporation (PLC). The company is required to file the Form INC-20A within 180 days of PLC incorporation. It is required to declare that the subscribers have deposited their share capital into the bank account.
This deadline isn't a minor formality; missing it triggers a penalty under Section 10A(2) of ₹50,000 on the company, plus ₹1,000 per day of default on every officer in default, capped at ₹1,00,000 each. And if the Registrar has reasonable cause to believe the company still isn't carrying on any business beyond the 180-day window, it can go a step further and initiate proceedings to strike the company's name off the register altogether.
Registration Fees Breakdown for Public Limited Company
The cost for the public limited company typically depends on the government, statutory, and professional fees. Other expenses involve SPICe+ filing charges from the Ministry of Corporate Affairs, state stamp duty imposed on the MoA and AoA, along with the working capital necessary to set up the business, and Digital Signature Certificates (DSC). Here is the complete breakdown of costs associated with a Public Limited company in India:
Statutory & Governance Fees
The cost is typically associated with statutory and government formalities. It starts with applying for the company name approval, which costs nearly ₹1,000. For obtaining the PAN and the TAN, the costs lie between ₹150 and ₹450. The fee is also associated with DIN (Director Identification Number). You can apply for up to three DINs by using the SPICe+ web form.
Class 3 DSC & Stamp Duty
All designated directors and signatories are required to obtain the Class 3 DSC (Digital Signature Certificate). At least 3 directors must hold the Class 3 DSC to digitally sign the applications and other required forms. The cost might range between ₹1,000 and ₹2,000 per person (issued by a Certifying Authority). On the other hand, the cost for stamp duty and MOA & AOA ranges between ₹2,000 and ₹20,000. It heavily depends on the state for stamp duty and authorized capital structure.
Professional Service Fees
The professional fees for the public limited company registration in India vary between ₹15,000 and ₹50,000, higher than those for a private limited company. The services of experts include providing professional advice, support for CS and CA, drafting the documents, SPICe+ web form filing, and submitting on the MCA portal.
What is the Timeline to Register a Public Limited Company?
The Public Limited Company registration process is straightforward and is registered via the MCA V3 portal by filing the SPICe+ web form. Furthermore, the complete government processing time for the PLC takes 7-10 working days or can be longer in strict cases where there are errors in the documents. Often, applications get delayed due to discrepancies or mismatches in address proof, or rejection of company name approval due to trademark issues.
Post-Incorporation Compliance for Public Limited Company
Under the Companies Act, a newly incorporated Public Limited Company is required to follow-up the several compliance formalities, especially within 30-60 days. Here is the complete checklist for a public limited company in India:
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This checklist covers the standard ROC compliance every PLC must follow, whether or not it's listed. If the company goes on to list its shares on a stock exchange, it takes on an additional layer: periodic disclosures and governance norms under SEBI's LODR Regulations, over and above what's in this table.
Conclusion
Before starting the Public limited company registration process, the individuals are required to meet the specific core requirements to align with MCA's guidelines. Furthermore, to incorporate a PLC, a minimum of 3 directors and 7 shareholders/members are required, a list of multiple documents and a Class 3 DSC (Digital Signature Certificate). The accurate guidance and support of an expert can help to minimize the hurdles associated with document management and in-order filing on the MCA portal. That's where JustStart helps businesses to reach their goals without getting stuck in heavy documentation and annual compliance formalities.
Frequently Asked Questions (FAQs)
Q1. What is the minimum number of directors and shareholders required for a public company?
Ans. In India, it is mandatory to have at least 3 directors and 7 shareholders to register a public company.
Q2. What is the minimum capital required for starting a public company in India?
Ans. In India, there is no minimum capital requirement to register a public company under the Companies (Amendment) Act, 2015.
Q3. What is the difference between a public limited company and a private limited company?
Ans. In essence, the most substantial difference between a public company and a private company is that a public company can offer its shares to the public at large and list them on a stock exchange, which is not possible for a private company.
Q4. What is the time frame for the registration of a public limited company in India?
Ans. Normally, it takes around 7 to 10 working days to register a public limited company in India from the date of submitting the application till the approval from the ROC for issuing the certificate.
Q5. Can I set up my public limited company without getting it listed on the stock exchange?
Ans. Yes, you can set up and operate a public limited company in India without listing it on the stock exchange. This is called an unlisted PLC; it follows the same Companies Act compliance as any other PLC but sits outside SEBI's listing regulations since its shares aren't publicly traded.
Q6. What documents are required for PLC registration?
Ans. Multiple statutory and identity documents are required for PLC registration in India. It generally requires the identity and address proof of all 3 directors and 7 shareholders, including registered office address proof, and other core incorporation documents like the MoA and AoA, drafted in the Table F format specific to public companies.
Q7. Can I convert my public limited company into a private limited company?
Ans. Yes, the Ministry of Corporate Affairs guidelines & Companies Act allow converting a public limited company into a private limited company.
Q8. What are the common reasons for public limited company application rejection?
Ans. The public limited company application is often rejected by the ROC (Registrar of Companies) on the MCA portal. The most common rejection reasons are incomplete or inaccurate documents, incorrect business name mentioned, missing director details, and failure to meet the statutory compliance during incorporation with the ROC (Registrar of Companies).
Q9. Is it mandatory to file the AOC-4 for a public limited company?
Ans. Yes, it is mandatory to file the AOC-4, mandated under Section 137 of the Companies Act, 2013. Every registered company is required to file audited financial statements.
Q10. What is the professional cost for public limited company registration in India?
Ans. The professional cost for a public limited company generally ranges between ₹15,000 and ₹50,000. The exact cost depends on the specific agency, scope of service, and authorized capital.
Q11. What happens if I miss the 180-day deadline to file INC-20A?
Ans. Missing the INC-20A deadline attracts a penalty under Section 10A(2), ₹50,000 on the company, and ₹1,000 per day of default on every officer in default, capped at ₹1,00,000 each. If the company still appears inactive beyond 180 days, the ROC can also initiate proceedings to strike its name off the register.
