Many of us must have come across the term Public Limited Company through media, journals, newspapers or from other sources in our day to day life. This is not a new concept or terminology to give detailed intro since we are all aware of this term.
A Public Ltd company almost has a legal designation of a limited liability company. This means that the Public limited company offers limited liability to the management and the owners. It raises an IPO (Initial Public Offering) and issues shares to the public. The shares of the Public limited company are traded in the stock market and can be possessed by anyone. Such offers are very much important from the company point of view since it helps in raising capital.
Public limited company and its distinctive features:
- According to the Companies Act, 2013 A Public limited company has a separate legal entity. Such a business entity has a wide legal capacity to own property and incur debts. This is because the members that include both the shareholders and the directors have no liability to the creditors of the company.
- Shares issued by the Public limited company are easily transferable from one individual to another. It just requires filing and signing of the share transfer form.
- A Public Ltd company can acquire, own, enjoy or terminate the property in its own name. This is to make sure that the shareholders do not claim any stake in the company property as long as the company is in operation.
Following are the 8 steps involved in Public limited company registration.
- Check for name availability – To commence any form of business entity, the first and the foremost thing is to select a unique name for the company. The name selected will bring a kind of perception such that the company stands out from the rest in the market. Hence it is very important the application for name approval made to the concerned authorities is laid down as per the guidelines. The proposed name with suffixes has to be submitted through an application without which the name approval will be rejected. The application for name approval must be supported with proof of signature, NOC from other associates, and NOC from persons involved. Once it is certain that the name is available with the Registrar of Companies, and then only the name will be approved.
A new web-based application has further simplified the name approval process called a RUN (Reserve Unique Name). Launched by the Ministry of Corporate Affairs RUN has made the entire process speedy and easy.
- The next step involved to get the two prime documents called the Memorandum of Association (MOA) and the Articles of Association (AOA). MOA is the most important document as it consists of all primary company details required for registration. It also lays down the objectives and the powers of the company. On the other hand, AOA states the rules and the regulations of the company. It also comprises of the companies bye-laws governing the internal affairs, management, and the conduct.
- Application for the registration – This is one of the most core sectors with regard to public limited company registration. The registration for a public limited company is filled by the Registrar of the registered office located in the jurisdiction of a company. Each subscriber signs the MOA and the AOA along with requisite fee. Moreover, the proposed directors should also ensure that they have not been acquitted in the court of law or found guilty of any fraud or breach of duty. This declaration is given by an advocate, chartered accountant or a cost accountant. It is mandatory to give the correspondence address of the company until the registered office is established.
- Appointment of Directors – AOA should contain all the particulars about the proposed directors. This includes their names, Director Identification Number (DIN), nationality, residential address, and their appointment.
- Issue of Certificate of Registration – Once the Registrar is satisfied with the documents submitted and filed it will issue a Certificate of Registration. The certificate will bear a Corporate Identity Number (CIN) which distinctively identifies the company.
- Registered office verification – A company must have its registered office within 15 days after getting incorporated. This is important because the company can receive and acknowledge all correspondences and notices that are addressed to it. The registered document of the title of the registered office with the company name on it has to be submitted. For this purpose proof of evidence of any utility services like a copy of the landline bill, electricity bill, or gas bill has to be submitted. The proof must have the address of the premises and should not be older than 2 months.
- Comply with tax registrations – Make it a point to intimate the Income Tax department for application regarding the arrangement for PAN. Also adhere to other tax registrations like GST registration, Collection Account Number (CAN) etc.
- Follow post incorporation procedures – Within 30 days of the incorporation of the company it is important to hire first auditors in the board meeting. A common seal of the company is engraved with the name during the inaugural meeting of the board of Directors. Also at the same time, the minutes of the meeting must be recorded within 30 days of the conclusion of the annual general body meeting.
If one follows the above-mentioned steps in an orderly manner, nothing can stop you from registering a public limited company.