Public Limited Company

Incorporating a Public Limited Company is a suitable option for large scale businesses that require huge capital. There should be a minimum of seven members with no limit on maximum number of members/shareholders for starting a Public Limited Company.

Usually, Public Limited Companies get listed with stock exchanges to raise capital from the general public. This is why Public Limited Companies have to comply with multiple regulations of the government and starting a public limited company becomes a cumbersome process.

Public Companies as defined under the Companies Act 2013 are the companies which are not private companies. Major characteristics of public companies are as follows:

Minimum members required are 7 and there is no limit on the maximum number of members.

There is no restriction on transfer the shares

Can invite money from the public subject to stringent compliances under the Companies Act, 2013, FEMA Regulations, SEBI Issue of Capital and Disclosure Requirements (ICDR) Regulations 2009, Securities Contracts (Regulations) Act 1956 etc

Minimum number of directors required are 3

Public companies are further divided into listed and unlisted public companies. Public companies have to adhere with more legal compliances than private companies such as appointing of Independent Directors in its Board of Directors, constitution of various committees under the Companies Act 2013, conducting Secretarial Audit etc.

If the company is a listed public entity then it has to comply with SEBI (Listing Obligations and Disclosure) Regulations 2015 (LODR) also such as quarterly compliance report on corporate governance, intimations to the Stock Exchanges of the Meetings of Board and members both before and after the meetings have taken place, submission of quarterly financial results with the stock exchange etc.

We generally advise our clients to first incorporate Private Companies, and as and when the business grows, to opt for converting the private company into a public company as compliances of private companies are easier to comply with in the initial stage of the business.

Requirements for Incorporating a Public Limited Company:

Minimum Paid-up share Capital          INR 5 lakhs

Minimum number of Directors            3

Maximum number of Directors            15

Minimum number of Shareholders    7

Maximum number of Shareholders    No Limit