Public Limited Company Registration: Definition, Advantages, Disadvantages

Public Limited Company: A public limited company, abbreviated as PLC, is a type of business structure available to businesses in the United Kingdom. Unlike other business structures such as sole traders and partnerships, the company exists independently of the owners, protecting them from liabilities and debt.

According to the Company Act 2013, a public limited company is one that has limited liability and sells shares to the general public. Anyone can purchase its stock, either privately through an initial public offering (IPO) or publicly through stock market trades. A public limited company is strictly regulated and is forced to declare to its shareholders its true financial health.

What Is A Public Limited Company? Public Limited Company Definition

A public limited company is a business-profit organization managed by directors and owned by shareholders. A public limited company may offer public shares. Additionally, there are additional duties that a PLC must meet as a result of being public, including additional tax management and making financial reports public so that possible future shareholders have all the information they need before investing. A public limited company is also listed on the stock exchange and is therefore required to be more transparent and open about its operations than a private limited company.

public limited

Is a Limited Company Private Or Public?

A public limited company is open to the public, which means that anyone can purchase its shares. Private limited companies (Ltds) do exist and are one of the most common business structures in the United Kingdom. The majority of public limited companies began as private limited companies and then converted to public status as they grew.

This is because a private limited company must have a minimum share capital of £50,000 to be eligible to go public, and most businesses require a period of business growth to reach this threshold. Additionally, the company must receive 75% of shareholder votes in favor of going public, and the necessary paperwork must be submitted to Companies House.

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Features Of A Public Limited Company

1:- Directors

To establish a public limited company under the Companies Act, 2013, a minimum of three directors is required and there is no limit on the maximum number of directors.

2:- Limited Liability

Each shareholder’s liability is limited. In simple terms, a shareholder in a public limited company is not personally liable for the company’s losses or debts in excess of their investment; this is in contrast to partnerships and sole proprietorships, where partners and business owners are jointly and severally liable for the business’s debts.

However, this characteristic of a public limited company does not provide shareholders with immunity. Shareholders will be held accountable for their unlawful acts.

3:- Paid-Up Capital

A public limited company must have a paid-up capital of at least Rs 5 lakh or such higher amount as the act recommends.

4:- Catalogue

A prospectus is a summary of the company’s affairs issued by a public limited company to its shareholders, and public limited companies are required to issue application forms under the Act. However, such provisions do not exist for private limited companies. This is because private limited companies are prohibited from soliciting public subscriptions for their shares.

5:- Name

Under the Companies Act, 2013, all public companies must include the word ‘limited’ after their name.

Public Limited Company Advantages

  • The company may raise capital through the sale of shares.
  • This capital can be used to finance expansion and new opportunities.
  • Additionally, capital can be used to repay debt.
  • Publicity helps build brand awareness.
  • A stock market listing can help boost a company’s reputation and fame.
  • Public records can aid in the recruitment of business partners.
  • Transparency can help improve a brand’s perception among customers.
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Public Limited Company Disadvantages

  • A PLC requires two directors, whereas a limited company requires only one.
  • increased regulation, both in terms of taxes and Companies House.
  • For public companies, HMRC tax deadlines are shortened.
  • Unlike company secretaries in limited-liability companies, the company secretary of a PLC must be fully qualified.
  • Shareholders can be anyone who wishes to purchase, reducing a company’s unified vision.
  • The more exposed a company is, the greater the number of shareholders, the more power has been distributed.
  • An annual general meeting of a public limited company is required.

When Should Business/Company Become a Public Limited Company?

Businesses are not bound to finally go public. Numerous businesses remain private throughout their existence. The majority of businesses that convert to public limited companies are well established, have a strong management structure, and are thus well-positioned to find ways to deal with going public.

Can a Public Limited Company Become a Private Limited Company?

Yes, a business can change its decision to go private by completing and submitting the official form to Companies House. The decision to revert to a public limited company is typically made when the advantages of being one no longer outweigh the disadvantages.

Requirements For Registration Of A Public Limited Company

  • The companies act, 2013 contains numerous rules and regulations governing the formation of a public limited company. What you should bear in mind when registering a public limited company is the following:
  • A public limited company must have a minimum of seven shareholders.
  • A public limited company must have a minimum of seven shareholders.
  • A public limited company must have a minimum of three directors.
  • A share capital of at least Rs.5 lakh is required.
  • When submitting self-attested copies of identity and address proof, one of the directors’ digital signature certificates (DSC) is required.
  • The proposed company’s directors will require a DIN.
  • A request for the company’s name selection must be made.
  • A written application containing the company’s primary objective rules is required. This object clause will define the purpose for which a business will exist following its incorporation.
  • The application must be submitted to the ROC along with the required documents such as the MOA, AOA, and duly completed Forms DIR–12, Form INC–7, and Form INC–22.
  • The ROC requires payment of the prescribed registration fees.
  • The company should apply for a “certificate of business commencement” after receiving approval from the ROC.

Documents Required For Incorporating A Public Limited Company

  • Identification of all shareholders and directors.
  • Identification of all shareholders and directors.
  • All directors and shareholders must provide proof of their addresses.
  • All shareholders and directors must have a PAN number.
  • Utility bill for the proposed office, i.e. the company’s proposed registered office.
  • A letter of no objection (NOC) from the landlord of the premises where the company’s office will be located.
  • Each director is assigned a Director Identification Number (DIN).
  • The directors’ Digital Signature Certificate (DSC).
  • Association Memorandum of Association (MOA).

How To Register For a Public Limited Company?

Step 1: Digital Signature Certificate (DSC)

Due to the fact that the company registration process is entirely online, a digital signature will be required when filing forms on the MCA PORTAL. A DSC is required of all proposed directors, as well as subscribers to the memorandum and articles of association.

DSC Service

Step 2: Director Identification Number (DIN)

It is a unique identifier for a director; anyone wishing to become a director of a company must obtain one. The company registration form must include the proposed director’s DIN in addition to his or her name and address proof.

DIN service

Step 3: Registration on the MCA Portal

To apply for company registration, a completed SPICe+ form must be submitted via the MCA portal. The director of a company must register on the MCA portal in order to complete the SPICe+ form and submit the required documents. After completing the registration process, the director will gain access to the MCA portal services, which include the ability to submit online forms and view public documents.

company registeration

Step 4: Certificate of Incorporation

After the registration application is submitted with all the required documents, it is examined by the Registrar of Companies. After verifying the application, he will issue the public company’s Certificate of Incorporation.

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FAQ’s Related To Public Limited Company:

What Is A Public Limited Company?

public limited company

A public limited company is a business-profit organization managed by directors and owned by shareholders. A public limited company may offer public shares. Additionally, there are additional duties that a PLC must meet as a result of being public, including additional tax management and making financial reports public so that possible future shareholders have all the information they need before investing. A public limited company is also listed on the stock exchange and is therefore required to be more transparent and open about its operations than a private limited company.

What are the Advantages Of Public Limited Company?

public limited company

– The company may raise capital through the sale of shares.
– This capital can be used to finance expansion and new opportunities.
– Additionally, capital can be used to repay debt.
– Publicity helps build brand awareness.
– A stock market listing can help boost a company’s reputation and fame.
– Public records can aid in the recruitment of business partners.
– Transparency can help improve a brand’s perception among customers.

What are the disadvantages Of Public Limited Company?

public limited company

– A PLC requires two directors, whereas a limited company requires only one.
increased regulation, both in terms of taxes and Companies House.
– For public companies, HMRC tax deadlines are shortened.
– Unlike company secretaries in limited-liability companies, the company secretary of a PLC must be fully qualified.
– Shareholders can be anyone who wishes to purchase, reducing a company’s unified vision.
– The more exposed a company is, the greater the number of shareholders, the more power has been distributed.
– An annual general meeting of a public limited company is required.