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Public Ltd Company

It is limited by shares and there are no caps on the maximum number of shareholders in the company. A public limited company can offer shares and debentures to the general public, accept deposits and no restrictions are placed on transfer of shares. Moreover, in a public limited company, the liability of a person is decided by the amount of shares he/she owns in the company. However, the liability of the director can be unlimited in this case.

The minimum number of shareholders is 7 and Directors is 3. It also has a minimum share capital requirement of Rs.500,000. A Public Limited Company should be registered with Registrar of Companies (RoC) of the respective State under The Companies Act, 1956. Although the registration with RoC is on State level, it is free to do Business anywhere in India.

 

Advantages Of Public Limited Company

A public limited company is a company that is able to offer its shares to the public. Advantages of a public limited company would include; profits are bestowed upon the company's shareholders, there is improved national insurance benefits, easy to transfer interest in business through ownership of shares. A public limited company is a form of business organization that operates as a separate legal entity from its owners. It is formed and owned by shareholders. Shares of a public limited company are listed and traded at a stock exchange market freely. Shareholders of a public limited company are limited to potentially lose only the amount they have paid for the shares they own.

 

» Tax burden reduces Sole traders and partners in a partnership pay income tax while companies pay corporation tax. While corporation tax rates are lower than income tax rates the advantage may lie with incorporation.

» Continuity of existence A public limited company is not affected by death of one of its shareholders, but her shares are transferred to the next of kin and the company continues to run its business as usual. In the case of a director's death, an election is held to replace the deceased director.

» Capital Public limited companies enjoy an increased ability to raise capital since they can issue shares to the public through the stock market. They can also raise additional capital by issuing debentures and bonds through the same market from the public. Debentures and bonds are unsecured debts issued to a company on the strength of its integrity and financial performance.

» Transfer of Shares is easy You can transfer Shares of a public limited company are bought and sold in a stock exchange market. They are freely transferable between its members and people trading in the stock exchange.

» Limited Liability Share holder liability for the losses of the company is limited to their share contribution only. This is what makes it a separate legal entity from its shareholders. The business can be sued on its own and not involve its shareholders. The company does not belong to any person since one person can own only a part of it.

 

Documents Required For Registration Of Public Limited Company

  • Memorandum of Association (MOA)
  • Articles of Association (AOA)
  • Letter of Authority/PoA
  • Form1
 
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