Public Limited Companies
A Public Limited Company (PLC) is a type of company structure that allows for the sale of shares to the public. This can provide a significant injection of funds that can be used for growth and expansion. Registering as a PLC can also improve a company’s credibility and reputation, as it demonstrates that the company has undergone a rigorous process of registration and is subject to greater regulatory scrutiny. However, there are also important compliance requirements that come with being a PLC, including financial reporting, director duties and liabilities, and market disclosure. Overall, becoming a PLC can be a good option for companies looking to raise capital and improve their reputation, but it is important to carefully consider the benefits and costs before proceeding with registration.
Increased Access to Capital: Registering as a PLC allows a company to sell shares to the public, which can result in a significant injection of funds that can be used for growth and expansion. This can be especially useful for companies that require large amounts of capital to fund their operations.
Improved Credibility and Reputation: Being a PLC demonstrates that a company has undergone a rigorous process of registration and is subject to greater regulatory scrutiny. This can improve the company's credibility and reputation with investors, customers, and other stakeholders.
Limited Liability Protection: One of the benefits of registering as a PLC is that it provides limited liability protection for shareholders. This means that the personal assets of shareholders are protected in the event that the company runs into financial difficulty.
Transferability of Shares: Shares in a PLC are generally freely transferable, which means that shareholders can easily buy and sell their shares on a public stock exchange. This can provide liquidity for shareholders and make it easier for them to exit their investment in the company.
Access to Skilled Professionals: As a publicly traded company, a PLC has access to a larger pool of skilled professionals, including bankers, lawyers, and accountants. This can be useful for a company that is looking to expand its operations or raise additional capital.
Attractiveness to Investors: Being a PLC can make a company more attractive to investors, as it demonstrates that the company has undergone a rigorous process of registration and is subject to greater regulatory scrutiny. This can result in increased demand for the company's shares, which can drive up the share price and provide a positive return for investors.
- Obtain Digital Signature Certificate (DSC): The first step is to obtain a DSC for at least one of the directors of the company. This is required for the online filing of forms with the Ministry of Corporate Affairs (MCA).
- Obtain Director Identification Number (DIN): All directors of the company must obtain a DIN from the MCA. This can be done online by filing Form DIR-3.
- Apply for Name Approval: The next step is to apply for name approval by filing Form RUN with the Registrar of Companies (ROC). The name must comply with the Companies Act, 2013 and should not be identical or too similar to the name of an existing company or trademark.
- File Incorporation Documents: Once the name is approved, the company must file the incorporation documents with the ROC. This includes the Memorandum of Association (MOA) and Articles of Association (AOA), along with Form INC-7, Form INC-22, and Form DIR-12.
- Obtain Certificate of Incorporation: If the ROC is satisfied with the incorporation documents, it will issue a Certificate of Incorporation. This marks the official registration of the company as a Public Limited Company.
- Apply for PAN and TAN: The company must apply for a Permanent Account Number (PAN) and Tax Deduction and Collection Account Number (TAN) with the Income Tax Department.
- Obtain GST Registration: If the company's annual turnover is expected to exceed Rs. 20 lakhs, it must obtain GST registration with the Goods and Services Tax Network (GSTN).
- Register for ESIC and EPF: If the company has employees, it must register for the Employees' State Insurance Corporation (ESIC) and the Employees' Provident Fund Organization (EPFO).
- File Annual Returns: Finally, the company must file annual returns and financial statements with the ROC and other regulatory authorities, as per the Companies Act, 2013.
Regulatory Compliance: PLCs are subject to greater regulatory scrutiny than private companies. As a result, they must comply with a range of legal and regulatory requirements, including filing annual reports and accounts, maintaining accurate records, and complying with relevant legislation.
Financial Reporting: PLCs are required to file regular financial reports with the relevant regulatory authority. This typically includes annual financial statements, which must be audited by a qualified auditor, as well as interim financial statements.
Director Duties and Liabilities: The directors of a PLC have certain legal duties and responsibilities to the company and its shareholders. These duties include acting in the best interests of the company, exercising reasonable care and skill, and avoiding conflicts of interest. Directors who breach these duties can be held personally liable for any losses incurred by the company.
Shareholder Communication: PLCs are required to communicate regularly with their shareholders. This typically involves holding regular shareholder meetings, providing timely and accurate information to shareholders, and responding to shareholder inquiries and concerns.
Corporate Governance: PLCs are expected to adhere to high standards of corporate governance. This includes maintaining an effective board of directors, establishing appropriate internal controls and risk management systems, and ensuring transparency and accountability in decision-making processes.
Market Disclosure: PLCs must disclose any information that is likely to have a significant impact on the company's share price or the decisions of its shareholders. This includes information about the company's financial performance, operations, and strategic plans, as well as any material events or changes that may affect the company's prospects.
