Overview of Public Limited Company Registration

Public limited companies enjoy all the rights of a corporate entity with limited liabilities and it is an ideal choice for the small and medium scale enterprises who wish to raise the equity capital from the general public.

Basic Clarification on Incorporation of Public Limited Company

Just like other companies, Public Limited Company is also registered as per the rules and regulations of the Companies Act, 2013. A public Company enjoys the benefits of limited liabilities for its members and has rights to sell its shares for raising the capital of the company. It can be incorporated with a minimum number of three directors and has more stringent rules and regulations as compared to a Pvt. Ltd. Company.

It must have a minimum number of seven members whereas there is no limit for the maximum number of members. It provides all the benefits of a private limited company along with more transparency and easy transferability of ownership and shareholding. Name, shares, formation, number of members, management and directors, etc differentiates any Public limited company from the private limited companies.

Benefits of Public Limited Company Registration

Here are the benefits provided to the company with Public Limited company registration

• Limited liabilities for the shareholders of the company

  Shareholders of the public company enjoy the benefits of limited liabilities under which their assets are safe and cannot be used to clear the debts and losses of the company. Despite of it, the shareholders are responsible for their own legal offenses. All the members, directors and shareholders enjoy this right and their assets cannot be seized by any bank, creditors or government bodies.

• Perpetual Succession

  A public limited company is considered as a corporate body that has perpetual succession. Means in case of death, retirement, insanity, and insolvency of one or more members/ shareholder/ directors, the company still continue its existence.

• Improved capital of the company

  In a public limited company, the general public is invited to buy the shares of the company. Hence, anyone can invest in a public company that improves the capital of the proposed company.

• Borrowing Capacity

  A public company can enjoy unlimited sources for borrowing funds. It can issue equity, debentures and can accept the deposits from the general public by selling its shares. Moreover, most of the financial institutions find public companies more prominent than other unregistered companies.

• Fewer risks

  Since public companies can sell their shares to the public, it lesser the scope of unsystematic risks of the market.

  Better opportunities for growth and expansion of the company:

• Fewer risks lead to better opportunities so that the company can grow and expand by investing in new projects from the funds raised by selling its shares in the market.

Documents Required for Public Limited Company Registration

An applicant has to collect all these documents to file along with the incorporation application:

• Identity Proof such as Aadhar card, PAN card, Driving License, Voter Id of all the designated directors and shareholders. 
• Address Proof of all the proposed directors and shareholder of the company.
• PAN card details of all the directors and shareholders
• Utility bill such as telephone, gas, water or electricity bill of the registered office as a residential proof of the business place. It should not be older than 2 months. 
• An NOC or No Objection Certificate from the landlord of the business place. 
• DSC or Digital Signature Certificate of the designated directors
• Memorandum of Association (MOA) and Article of Association (AOA)

Features of Public Limited Company Registration

Here are some important features of Public Limited Company:

• Number of Directors in the company

  As stated in the provisions of Companies Act, a public company must have a minimum number of 3 directors to incorporate a company whereas there is no restriction on the maximum number of directors.

• Name of the Company

  All the Public limited companies must add “Limited” word at the end of their name. it is denoted as an identity of a public company.

• Prospectus of the Company

  Prospectus of the company is mandatory for the public limited companies. It is issued by the proposed company for its general public. It is a note of comprehensive statements of works and affairs of the company. However private companies have no such compliances as they don’t have rights to invite the public for their shares.

• Paid-up Capital

  As per the requirements of the act, no minimum capital required for the registration.

What is the difference between the Public limited Company and Private Limited Company?

There are various points of differences between both these companies. Here are some chief differences between both:

Public Limited Company Registration Procedure

• Step 1: Apply for the Digital Signature Certificate

  First of all, you have to apply for the Digital Signature Certificate for all the proposed directors in the company. DSC is used to sign the e-forms and is an authentic and safe method to file all the documents on an electronic platform. It is a mandatory document.

  A director can easily obtain DSC from the nearest Certifying Authorities or CAs with self-attested coppices of their identity proof. It takes around 1 -3 working days to obtain a DSC.

• Step 2: Name Verification

  The third step involves name registration of the company. You can check the name availability through the MCA portal by following this step

  Visit the MCA Portal> select the MCA services> Click Check Company Name

  Note: The company name should not be taken or registered and should not be similar to a brand name.

• Step 3: Filing Form SPICe+

  Once the company’s name has been approved you can now file the SPICe+ form to avail the company incorporation certificate. Along with it, you have to file all the required documents such as MOA (Memorandum of Association) and AOA (Article of Association). These two documents contain the details of the mission, objectives, aims, visions, business activities, responsibilities of all the directors and shareholders and definition of the proposed company.

  All the documents and applications are further verified by the higher authorities and it takes around 7 to 9 working days.

• Step 4: Obtaining Certificate of Incorporation

  Once all the applications and document to have been received to the authorities and they have verified it, the company would receive the Certificate of Incorporation which will include CIN and date of incorporation.

Requirements for the Public Company Registration

According to the provisions of Companies Act, 2013 here are the requirements you need to fulfill to incorporate a Public company in India:

• The proposed company must have a minimum number of 7 shareholders
• The proposed company must have a minimum number of 3 directors
•  No minimum capital required
• At least one director should have a Digital Signature Certificate
• Memorandum of Association and Article of Association.
• After approval from Registrar of the Companies, the proposed public company has to apply for the “Certificate of Business Commencement.”

Limitations Imposed on Nidhi Companies

According to the Rule 6 of Nidhi rules 2014, a Nidhi Company has been restrained from performing given undertakings

• Undertake business activities relating to leasing finance, Chit fund, and Hire purchase.
• Acquiring securities issued by a body corporate
• Issue debentures, preference shares, or any debt instruments
• Open current account with its serving members
• Make any arrangements or acquisitions or concessions until the same is approved in the General meeting via a special resolution and get the approval of the Regional Director.
• Perform other form of business in its name
• Lend to or accept funds from third party
• Lend to accept funding from body corporate.
• Leveraging partnership arrangement for borrowing or lending operation.
• Conducting publicity for obtaining any deposits in any form
• Pledge assets lodged by its members as security.
• Pay any incentive or brokerage for disbursing credits or deployment of funds to channelize deposit from its members.

Note:

If the company meets all the aforementioned provisions, it can facilitate locker facilities to its members if the income from locker render does not surpass 20 percent of the total income of the Nidhi company at any instance during the FY.

Private circulation of the particulars relating to FD schemes among members bearing the terms “for private circulation to members only” shall not be considered as an advertisement.

Public Limited Company Registration Procedure

• Step 1: Apply for the Digital Signature Certificate

  First of all, you have to apply for the Digital Signature Certificate for all the proposed directors in the company. DSC is used to sign the e-forms and is an authentic and safe method to file all the documents on an electronic platform. It is a mandatory document.

  A director can easily obtain DSC from the nearest Certifying Authorities or CAs with self-attested coppices of their identity proof. It takes around 1 -3 working days to obtain a DSC.

• Step 2: Name Verification

  The third step involves name registration of the company. You can check the name availability through the MCA portal by following this step

  Visit the MCA Portal> select the MCA services> Click Check Company Name

  Note: The company name should not be taken or registered and should not be similar to a brand name.

• Step 3: Filing Form SPICe+

  Once the company’s name has been approved you can now file the SPICe+ form to avail the company incorporation certificate. Along with it, you have to file all the required documents such as MOA (Memorandum of Association) and AOA (Article of Association). These two documents contain the details of the mission, objectives, aims, visions, business activities, responsibilities of all the directors and shareholders and definition of the proposed company.

  All the documents and applications are further verified by the higher authorities and it takes around 7 to 9 working days.

• Step 4: Obtaining Certificate of Incorporation

  Once all the applications and document to have been received to the authorities and they have verified it, the company would receive the Certificate of Incorporation which will include CIN and date of incorporation.

Requirements for the Public Company Registration

According to the provisions of Companies Act, 2013 here are the requirements you need to fulfill to incorporate a Public company in India:

• The proposed company must have a minimum number of 7 shareholders
• The proposed company must have a minimum number of 3 directors
•  No minimum capital required
• At least one director should have a Digital Signature Certificate
• Memorandum of Association and Article of Association.
• After approval from Registrar of the Companies, the proposed public company has to apply for the “Certificate of Business Commencement.”

Types of Compliances

There are two types of compliances as mentioned in the Companies Act and Nidhi Company Rules: 

1. Annual compliances of Nidhi Company

Annual Compliances are generally those compliances that include the status and performance of the Nidhi Company in the whole year. The annual compliances are filed annually, but few such compliances are filed after a certain interval of time. 

2. Event-Based Compliances of Nidhi Company

Event-based compliances are only filed at the time of incorporation of Nidhi Company. And again, these compliances are needed to be fulfilled at the time of any alteration in the structure of the Nidhi Company, and such alteration is non-periodical. These compliances are not mandatorily to be filed at a fixed interval. 

Filing Compliance with Registrar of Companies as Per Nidhi Rules 2014 and Amended Rules 2022

The checklist for Annual compliance:

• Form NDH 1
• Form NDH 2
• Form NDH 3
• Form NDH 4
• Form NDH 5
• Declaration of Nidhi by the Central Government
• Form ADT 1
• Preservation of Book of Accounts
• Protection of the Statutory Register
• Financial statements
• Director’s report
• Statutory Meetings
• Filing of Annual Income tax returns 
• Form AOC 4
• Form MGT 7

The checklist for Event-based compliance:

• Change of name of the company
• Alteration in the address of the Registered Office
• Appointment or resignation of any Director
• Appointment or resignation of any Auditor
• Changes in objectives of Company (MOA)
• Transfer of shares
• Alteration in capital structure
• Increase in authorised capital
• Appointment of KMP (Key Managerial Personnel)

Penalties for non-compliance

When the Nidhi Company fails to comply with the required compliances as mentioned under the Companies Act or the Nidhi Company Rules, then it is made liable for:

• Rs. 5000, with other officers in case of non-payment or default 
• And then for Rs. 50 per day till the default continues.