Public Limited Company

What Are the Key Benefits of Forming a Public Limited Company in India?

A Public Limited Company is one of the most powerful business structures for entrepreneurs who aim to enter the corporate world with scale and visibility. It offers an ideal platform for startups and growing businesses that plan to expand operations, raise large capital, and build long-term credibility in the market.

This form of company provides the advantage of limited liability to its members while allowing the company to invite investment from the public—a feature not available to private limited companies. By issuing shares to the public, a public limited company can raise substantial funds for growth, innovation, and expansion. It also operates with fewer restrictions on ownership transfer, making it attractive to investors.

Below are the major benefits of a Public Limited Company:

1. Free Transferability of Shares

Shares of a public limited company are freely transferable. No prior approval or consent is required from other shareholders or the company for transferring shares. This liquidity makes the company more attractive to investors and enhances market participation.

2. Limited Liability of Shareholders

The liability of shareholders is limited only to the face value of the shares they hold. Their personal assets remain protected, even in the event of business losses or insolvency. This feature encourages investment and reduces personal financial risk.

3. Separation of Ownership and Management

In a public limited company, shareholders are the owners, but the day-to-day operations are managed by the Board of Directors and professional management. This separation allows the business to be run efficiently by experienced professionals while shareholders remain passive investors.

4. Ability to Raise Capital from the Public

A public limited company can raise funds from the general public by issuing shares and debentures. It can also list on stock exchanges and access capital through IPOs and further public offerings. This makes it ideal for large-scale projects and long-term expansion.

What Are the Minimum Legal Requirements to Incorporate a Public Limited Company in India?

To incorporate a Public Limited Company in India, certain minimum legal conditions must be fulfilled as prescribed under the Companies Act, 2013 and subsequent amendments. These requirements ensure that the company is properly structured, governed, and capable of operating in the public domain.

Below are the essential legal prerequisites for forming a public limited company:

1. Minimum Capital Requirement

There is no minimum paid-up capital required to incorporate a public limited company.

As per the Companies (Amendment) Act, 2015, the earlier mandatory capital threshold has been removed. This means a public company can now be incorporated with any amount of capital, even with zero paid-up capital at the time of registration. This change has made public company formation more accessible and flexible for promoters.

2. Minimum Number of Directors

A public limited company must have:

• At least 3 directors, and

• A maximum of 15 directors (which can be increased by passing a special resolution).

These directors are responsible for managing the company’s affairs and ensuring compliance with statutory obligations.

3. Minimum Number of Shareholders (Members)

For incorporation, a public limited company must have:

• A minimum of 7 shareholders or members, and

• No upper limit on the maximum number of shareholders.

This open-ended structure allows public companies to raise capital from a large number of investors and expand their ownership base over time.

What Documents Are Required to Incorporate a Public Limited Company in India?

1. Mandatory Personal Documents

The following documents are compulsory for all proposed shareholders and directors:

• PAN Card of each shareholder and director

• Aadhaar Card of each shareholder and director

These are used for identity verification, DIN allotment, and statutory registrations.

2. Identity Proof of Directors and Shareholders

(Any one of the following):

• Passport

• Voter’s Identity Card

• Driving Licence

These documents confirm the legal identity of the individuals associated with the company.

3. Address Proof of Directors and Shareholders

(Any one of the following – recent):

• Telephone bill

• Mobile bill

• Bank statement

• Electricity bill

These proofs validate the residential address of each director and shareholder.

4. Address Proof of the Registered Office

(Any one of the following):

• Utility bill such as electricity, water, gas, or telephone bill

• Rent agreement along with rent receipt (if the premises are rented)

• Proof of ownership such as property papers or registry documents (if owned)

This confirms the principal place of business of the proposed public limited company.

What Is the Process for Incorporation of a Public Limited Company in India?

1. Apply for name

First step in incorporating a company is for reserving the name of proposed company in part-A of SPICe Plus (SPICe+) form. In this form choose your business activity and file for two proposed name, if CRC will reject the proposed name then file again with two new name within the certain time limit from the date of rejection (15 days) .

2. Apply for DSC

Next step is to apply for DSC (Digital Signature Certificate) which will be used for signing the forms by proposed directors and proposed members respectively. Procure DSC for both proposed directors and member, if both are different.

3. Fill the SPICe plus Form (SPICe+)

Once, your name get reserved under it will be valid for 20 days from the date of approval, within 20 days you have to fill up the form and upload it online.SPICe+ is advance form combination of 8 forms in one. Through this proposed company can apply for at once:

• Name reservation
• Incorporation
• Apply for DIN
• TAN
• PAN
• EPFO
• ESIC
• GSTIN

 Next step is to fill the part-B of SPICe + which will contain all the detail related to incorporating company like number total number of directors and members, Authorized share capital, paid up capital, number of share hold by members, company registered address detail, directors and member detail and will required attachments for proof. Then draft the MOA (memorandum of association) and AOA (Article of Association) of proposed company, then fill form required for EPFO and ESIC registration with detail, then Fill the AGILE form for procuring GSTIN. After filling all these attach the signature and then upload it on MCA website.

FAQs

Q. What is a public limited company?

A. A company that is not a private company is called a public limited company, which can transfer its share easily and can invite the public for investment.

Q. Pre-requisite for a public limited company?

A. -Must have paid-up capital of minimum 5 lakhs

    -Must have a minimum of 3 directors

    -Must have a minimum of 7 subscribers/shareholder

Q. Benefits of a public limited company?

-Transferability of shares.

-Can invite general public for investment

-The liability of members is limited

Q. Documents required for incorporating a company?

A. ID proof of proposed Directors and members:

i. PAN card (Mandatory)

ii. Aadhar card (Mandatory)

iii. Photograph of the proposed director (mandatory)

iv. Passport  or Voter’s ID or Driving License

B. Address proof of proposed members and directors (any one of  the following):

i. Telephone bill

ii. Mobile Bill

iii. Bank statement

iv. Electricity bill

C. Address proof for the principal place of business of the proposed company (any one of  the following)

i. Utility bill like telephone bill, electricity bill, gas bill, water bill

ii. Rent agreement with rent slip

   iii. Proof of ownership

What Is the Difference Between a Private Limited Company and a Public Limited Company?