Public limited company

A public limited company is a company that is not a private company, under section 2(71) of the Companies Act, 2013. Company Suggestion incorporates it through SPICe+. It needs at least 7 members and 3 directors, and its name ends with Limited.

What is a public limited company?

Section 2(71) defines it by exclusion. It is not a private company, and a subsidiary of a public company is a public company even if its articles look like those of a private company. The liability of a member is limited to the unpaid amount on the shares that member holds. There is no minimum paid-up capital.

The company may invite the public to subscribe for shares. That invitation is not the same thing as a listing. An unlisted public company raises money without a stock-exchange listing. A listed company takes the further step under the securities law.

How does it differ from a private company?

The private limited company keeps three limits that a public company drops.

Members: at least 7, and no maximum of 200.
Directors: at least 3. A private company needs 2.
Shares are freely transferable. The articles do not give the existing members a first right the way a private company’s articles do.
The name ends with Limited, not Private Limited.

A private company becomes a public company by the route in the conversion page. A public company is not formed as a one person company.

Which papers does incorporation need?

The file is the same kind of file as any other company, with more subscribers.

PAN, Aadhaar, and a photograph of each subscriber and the first directors
A digital signature for each person who signs SPICe+
The registered office: ownership or rent papers, a utility bill not older than two months, and a no-objection from the owner if the place is rented
The proposed name, ending with Limited, and the main objects

What are the incorporation steps?

Company Suggestion incorporates the company in four steps.

The name is reserved in SPICe+ Part A. It must not be too close to an existing company or a registered trademark.
Part B is filed with the memorandum, the articles, and at least 7 subscribers and 3 directors.
The certificate of incorporation is issued with PAN and TAN. There is no commencement certificate after that.
The first board appoints the first auditor, and the company files ITR-6 each year.

Frequently asked questions

4 questions cover the rules that decide this registration.

Must a public company be listed?

No. A public company may invite the public to subscribe for its shares. Listing on a recognised stock exchange is a separate process under the securities law. An unlisted public company does not trade its shares on an exchange.

How many directors and members are required?

At least 7 members and 3 directors. There is no cap of 200 members. A subsidiary of a public company is itself a public company.

Does it need a certificate of commencement?

No. The certificate of commencement of business is not issued. The company receives a certificate of incorporation, with PAN and TAN, through SPICe+.

When must a public company appoint a company secretary?

A listed company must. An unlisted public company must when its paid-up share capital is ₹10 crore or more. Below that capital, the appointment is not required by that rule.