Procedure for Public Company Registration in India
joel
November 29, 2023 at 11:49 AM
In this business world, establishing a Public Limited Company can be a strategic move that brings important advantages. Public Limited Company Registration provides access to considerable capital, increases your Company’s prestige & opens doors to international markets. A Public Limited Company is a business entity that has provided its shares to the public via a stock exchange. This means that anyone comprising individual investors & institutions can purchase shares in the Company, making it an extensively held enterprise. Public Limited Companies are predominant in sectors like finance, technology & manufacturing. So, if anyone wants to set up a Public Limited Company, then they should know all the requirements, documentation, and the procedure for Public Company Registration. In this article, we are going to discuss the detailed procedure for Public Company Registration in India.
What is the Importance of Public Limited Company Registration in India?
- Higher Credibility: A Public Limited Company gives a higher level of credibility & trust in the market. Public Companies are subject to strict regulatory oversight which can instill confidence in partners, customers & investors.
- Access to Capital: It helps to allow a Company to raise capital by issuing shares to a large pool of investors. This influx of funds can be used for different purposes like developing new products, expanding operations, or reducing debt.
- Shareholders’ Liquidity: Shareholders’ of these types of companies can easily buy & sell their shares on the stock exchange, providing flexibility & liquidity for investors.
- Growth Opportunities: Going public can pave the way for mergers, acquisitions & strategic partnerships, providing the Company’s growth & market presence.
- Incentives to the Employee: Public companies in India often use equity-based compensation & stock options to attract & retain top talent, aligning employees’ interests with the Company’s success.
Challenges in a Public Limited Company
- Costs: The Procedure for Public Limited Company can be expensive, involving legal expenses, underwriting fees & ongoing compliance costs.
- Loss of Control: Going public may dilute the ownership stake of the Founders & existing shareholders, potentially leading to a loss of control over the Company.
- Market Volatility: Publicly traded stocks are subject to market variations & investor sentiment which can impact stock prices & shareholder value.
- Regulatory Compliance: In India, Public Companies face multifaceted regulatory requirements like disclosure, financial reporting & compliance with stock exchange rules.
Important Points to keep in mind before starting the Procedure for Public Company Registration
Following are some vital points to keep in mind before starting the procedure for Public Company Registration:
- A minimum 7 shareholders are required to setup a Public Limited Company;
- A minimum of 3 Directors is required to setup a Public Company;
- DSC of 1 Directors is required while submitting self-attested copies of ID & Address proof;
- DIN for all the Directors;
- A minimum authorized share capital of Rs. 1 lakh is needed;
- The Company name must be as per the provision of the Company Act & Rules;
- Documents like MoA (Memorandum of Association), AoA (Articles of Association) & duly-filled Form DIR-12 is required.
Online Procedure for Public Company Registration in India
A Public Limited Company in India must be registered under the Companies Act, 2013, the procedure for Public Company Registration for which has been completely digitized by the Indian Government. The entire procedure for Public Company Registration has been 100% online, beginning from the submission of documents & application to issue the Incorporation Certificate by the RoC. Following is the step-by-step Procedure for Public Company Registration:
Step 1: Documentation: To apply for Public Limited Company Registration, you must arrange some vital documents. Before starting the procedure for Public Company Registration, you must ensure that you are in possession of all such documents & if you miss any of the documents, you must arrange for it as soon as possible.
Step 2: Company Name Reservation: Once you have selected a valid Company Name, you must reserve it with RoC to prevent its misuse & copy by other business entities. For this, all you need to do is avail our services of Company Name Approval & reservation, where we will not only search the names’ validity suggested by you, but also apply for its reservation in the Part-A Form of the SPICe+ application.
Step 3: Filing of SPICe+ Form: After approving the proposed Company Name, you can proceed with its Registration. To apply for the Public Company Registration, you are required to file SPICe+ form. The SPICe+ Form is divided into 2 different parts Part-A is for the Company Name Reservation & Part-B for the Company Incorporation. The application for the Company Incorporation is filed out & signed out by any 1 Director of the Company & submitted to the Registrar of Companies along with the prescribed set of documents attached with it.
Step 4: Issuance of CoI: After receiving the Incorporation application, the Registrar of Companies verifies all the details & documents provided in it. Only after the Registrar of Companies is satisfied with the authenticity of such documents & details he or she shall register the Public Limited Company & issue a Certificate of Incorporation to the Company as a proof of such Registration. Additionally, the Registrar of Companies also allots a CIN as the unique identity of the Company.
Step 5: Issuance of PAN & TAN: After getting CoI is issued to the Company by the Registrar of Companies, the Ministry of Finance issues the PAN & TAN to the Company. While a PAN is a necessary document for tax payments & compliance, TAN is required to entitle the Company for deducting & collecting taxes at source.
Step 6: Filing Form 20 A: In India, a Public Limited Company can start business activities before, during or after its Registration. However, if it hasn’t started its business operations even after its Incorporation, the law provides a maximum time of 6 months from the date of Incorporate Certificate issuance within which the Company must begin its business activities & intimate the same to the Registrar of Companies in Form INC-20A. In case the 6 months of time period expires without the Company starting its business activities, it stands the risk of being struck off from the Registrar.
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