Public Limited Company

PUBLIC LIMITED COMPANY

A public limited company is a voluntary association of members which can be incorporated by seven or more persons. It has a separate legal existence apart from its members who compose it. It must have a minimum of seven members but there is no limit as regards the maximum number. It’s shares are freely transferable and that too without the prior consent of other shareholders. It is independent legal person, its existence is not affected by the death, retirement or insolvency of any of its shareholders. These companies can invite capital and deposits from the public. These Companies can be listed or unlisted.Public Limited Company governed in India by Companies Act 2013, and define under section 2(71).

A public company is not authorised to begin its business operations just upon the grant of the certificate of incorporation. In order to be eligible to run as a 
public company, it should obtain another document called certificate of business.

When the company become listed has permission to issue registered securities to the general public through an initial public offering (IPO) and it is traded on at least one stock exchange market. 

Requirement:

Minimum Seven People: Minimum seven people are required to start the public limited company in India. These companies shall have minimum three directors. The same seven people can become shareholder and director of the company. However, maximum any number of people can become shareholder in the public limited company.

Minimum Authorised Share Capital Rs. 500,000 (INR Five Lac)

One Resident Director: Among director, one person must be resident Indian.

Unique Name: The name of the public limited company should be unique and should not be similar to the any existing company name or trademark.

Advantages Of Public Limited Company Registration:

Larger amount of capital: Public limited companies can bring more capital as compared to other form of organization. There can be unlimited number of shareholders, 
who can contribute to the capital of the public limited company.

Efficient management: Public limited company is more efficiently managed entities as compared to other form of organization. These have larger pool of talented people, who contribute in efficient management of public limited company.

Free transfer of shares: A public limited company shares are purchased and sold on the market. They are freely transferred among the members and the people trading on stock markets..

Larger Borrowing Power: Public companies are most recognized in terms of financial assistance from banks and financial institution and also there are several financial instruments available to public limited companies, which are not available to other form of business organization.

Limited Liability of shareholder: Liability of shareholders of the public limited company are limited only up to the shares subscribed by them and should not be personally liable for the debts of the company in case company are unable to pay its liabilities.

Separate Legal Entity: Public limited company legal entity are separate than its shareholders/promoters.

Perpetual Existence: Public limited company existence will go for ever and its existence will not be effected by the death of shareholders, directors or transfer of shares to others.

Transparency: Public limited companies are strictly regulated and are required by law to publish their complete financial statements annually and quarterly to ensure the true financial position of the company is made clear to their owners (shareholders) and potential investors. This also helps to determine the market value of its shares.

Capacity to Sue and to be Sued: Public limited company can take legal action against another and also other person can take legal action against company separate from directors, shareholders & promoters.

Ownership of property: Public limited company can sale, purchase and own the property like individual.

Key difference point between a private limited and a public limited company:

Meaning: A public limited company is a company listed on a recognized stock exchange and the stocks are traded publicly. On the other hand, a private limited company is neither listed on the stock exchange nor are they traded. It is privately held by its members only.

Min. Members: Minimum 7 members must be required to form a public company.Minimum 2 members must be required to form a private company.

Max Members: There is no maximum limit of the member in public company.The maximum limit of the member in a private company is 200.

statutory general meeting: In case of a public company, it is compulsory to call a statutory general meeting of members. There is no such compulsion in case of a private company.

Start of Business: Certificate of incorporation and commencement of business is required to start the business.The only certification of incorporation is required to start the business.

Shares Transferability: Share can be transferred freely in public companies.Transfer of share is restricted in private companies.

Regulatory burden: There is a greater regulatory burden on a public limited company. This is because a great amount of information has to be made available to the public who are shareholders or prospective shareholders. A lot of money has to be invested in order to prepare reports and disclosures that match with the regulations provided by SEBI.

Written resolution: A signed written resolution is received by holding general meetings of a private limited company.

Company secretary:While it mandatory for public companies to appoint a company secretary, private companies may choose to do so only at their will.

Funding: A public company can raise funds by issuing an IPO in the general public.Private companies can raise funds through private investors.

Issue of Prospectus: It is their mandate to issue the prospectus for public co..It is not required in a private company.

Quorum at AGM: 5 members should be present personally at AGM for public company.2 members should be present personally at’ AGM.

Size: Generally, the size of the public company is very huge.Normally the size of a private company is small in comparison to the public company. But a private company also be a big company.