A public limited company is a business model which is registered by the Ministry of Corporate Affairs. It gives a big platform to the entrepreneur for expanding their business on national as well as international level as the name comprises “PUBLIC” words which clearly shows that the company can raise their funds from the general public and they have full interest and stake in the company. However, their liabilities are limited. A public company generally starts with a minimum of 7 people, but there is no maximum limit of the shareholder. In private limited companies, the numbers of members restricted to only 200, but there is no such limit in the public limited company which means there can be either 50 shareholders or 5000 shareholders in the public company, but it should not be less than 7. The management is handled by the board of directors of the company which contains a minimum of 3 and a maximum of 15 individual persons as directors of the company.
The trading of the share is also possible under a public limited company through the stock exchange. Under this company, any person can become the shareholder of the company no matters where he lives and what is his identity the only thing he needs is that he should hold at least one share of the company to become its shareholder. People invest their funds and get the opportunity to earn a profit in the form of dividends and other different ways.
Directors : As per the provisions of the Companies Act, 2013 to start a public limited company, a minimum of 3 directors are required and there is no restriction on the maximum number of directors.
Limited Liability : The liability of each shareholder is limited. In simple words, a shareholder of a public limited company isn’t personally responsible for any loss or debts of the company for any amount greater than the amount invested by them; contrary to partnerships and sole proprietorships, where the partners and business owners are jointly and severally liable for the debts of the business. However, this characteristic of a public limited company does not offer immunity to the shareholders. The shareholders will be held responsible for their illegal actions.
Paid-up capital : A public limited company is required to have a minimum paid-up capital of Rs 5 lakh or such higher amount as prescribed under the act.
Prospectus : A prospectus is a comprehensive statement of the affairs of the company issued by a public limited company for its public and there is a requirement under the Act for public limited companies to issue a prospectus. However, there are no such provisions for Private Limited Companies. This is because private limited companies cannot invite the public to subscribe for their shares.
Name : It is a compulsory requirement under the Companies Act, 2013 for all the public companies to add the word ‘limited’ after their name.
There are various rules and regulations prescribed under the companies act, 2013 for the formation of a public limited company. Here is what you should keep in mind when registering a public limited company:
Following are the advantages of forming a public limited company:
Scan to Download Jangstkendra App