Introduction

Incorporation Of A Public Limited Company, Public Limited Company

A Public Company – Section 2(71) of the Companies Act, 2013 states that a – “Public Company means a company which:

Is not a private company; AND
Has a minimum paid up capital as may be prescribed

PROVIDED that a company which is a subsidiary of a company, not being a private company, shall be deemed to be a public company for the purpose of this Act even where such subsidiary company continues to be a private company. “

Article of Association

Thus, as per this definition, a Public Company is one that is either incorporated as a public company or is a subsidiary of a public company irrespective of its formation as a private company as per the Article of Association (AOA). When a company is considered as a public company by the virtue of being a subsidiary of a public company, all the provisions applicable to a public company will also apply to its subsidiary private company and there is no need to alter the article of association. A Public Limited Company can be incorporated as either a Public Company limited by shares or as a Public Company limited by guarantee.

While incorporating the company the same needs to be decided and the AOA and MOA need to be filed accordingly.[2] For a Public Company limited by shares, it has to be in the form given under Table A of section 4(6) for MOA and Table F for AOA and for a Public Company limited by guarantee, it has to be in the form as per Table C (having share capital) and Table B (not having a share capital) for MOA and Table G (having share capital) and Table H (not having a share capital).

CHARACTERISTICS OF A PUBLIC LIMITED COMPANY

A Public Limited Company is a company that has limited liability and may offer shares to the general public by Initial Public Offer (IPO) or through the stock market, in case it is listed. Following are its important features/ characteristics:

Limited Liability-

The liability of all the shareholders of a public limited company is limited up to the unpaid amount on the shares held by them and thus the shareholders cannot be called upon to pay any amount over and above it making the investment or shareholding in a company more favourable for the shareholders as it provides them with a safety net.

Directors-

As per section 149(1) of the Companies Act, for the incorporation of a public company a minimum no. of 7 directors are required. At most, a company can have 15 directors and if it wants to appoint more than 15 directors then it will have to pass a special resolution in the general meeting regarding it. Out of all the directors, atleast 1 director shall be in India for a minimum of 182 days.

Paid up share capital-

Earlier there was a minimum paid up share capital limit of 5 lakhs or higher (as prescribed) but the same has now been removed and now the minimum paid up share capital needs to be as prescribed from time to time by the Ministry of Corporate Affairs(MCA).

Prospectus-

A prospectus means any document that has been issued by the company inviting applications for the subscription of shares from the general public. A prospectus shall disclose all the necessary information regarding the affairs of the company and it shall present all the information in a true and fair manner.

Name-

The name of the company shall be consistent with the object of the company. As per the companies Act, it is mandatory that the company shall add the word ‘limited’ at the end of its name.

DOCUMENTS REQUIRED

For the company to start its business it needs to receive an Incorporation Certificate from MCA and for this a number of documents are required to be submitted.

They are as follows:[3]

Proof of identity of all the shareholders and directors
Proof of address of all the directors and the shareholders
PAN number of all the shareholders and directors
Utility Bill of the proposed office i.e. proposed registered office for the company
A NOC (No Objection Certificate) from the landlord where the office of the company will be situated
Director Identification Number (DIN) of all the directors
Digital Signature Certificate (DSC) of the directors
Memorandum of Association (MOA), also e-MOA
Articles of association (AOA), also e-AOA

Apart from this, all the basic conditions like the minimum paid up share capital and the minimum no. of directors needs to be fulfilled beforehand.

INCORPOTAION PROCEDURE

Broadly 5 main steps need to be followed for the incorporation of a public limited company-[4]

Step 1 – Apply for Name Approval

An application to reserve the name can be made online by the ‘RUN form’ which is available on the MCA website. This form needs to be fully filled, however, only one name can be applied for at a time. The availability of the name is auto checked and on the payment of a requisite fee, the Name will be reserved for 20days. This is an optional step as companies can also apply for the name directly through the SPICe form.

Step 2 – Prepare Documents for Incorporation

Following documents are to be submitted in their correct form and attached with Form SPICe INC-32:

INC-9: It is an Affidavit/ Declaration by the first subscribers and directors that no fraud, misfeasance, offence or conviction has been committed by the company.
DIR-2: It is the declaration of their willingness to act as the first directors and subscribers of the company. This also contains the copy of proof of identity and residential address of all of them.
NOC from the owner of the property.
Proof of office address (conveyance deed, rent agreement, lease deed, etc. along with rent receipts). However, a company can apply for its incorporation without mentioning the registered office’s address if it has not been finalised then but then within 30days of its incorporation it will have to file Form INC-22 with the details of the registered office.
Copy of utility bills not later than 2 months.

Step 3- Filing of Form SPICe INC-32

Form SPICe INC-32 has to be filled with all the documents mentioned in step 2. This is a recent online form that has been introduced by the MCA as a single Performa window which can also be used to apply for the following:

Apply for DIN (Director Identification Number) of maximum 3 directors.
Include details of maximum 7 subscribers
Include details of maximum 20 directors
Apply for Name Approval if not already made by the RUN facility
Apply for PAN (Permanent Account Number), TAN (Tax deduction and collection Account Number) and CIN (Company Identification Number)

A requisite fee needs to be paid while submitting this form. However, no fee is payable by a company having share capital if the nominal capital is upto Rs. 10 Lakhs and a Company not having share capital but formed with a maximum of 20 members.

Step 4 – File e-MOA and e-AOA

After the filing of the SPICe form, the company needs to file its e-MOA and e-AOA in INC-33 and INC-34 respectively.

Step 5 – Issue of CO1

After all the above steps and the verification by the MCA, MCA will issue the Certificate of Incorporation (COI) along with the CIN, PAN and TAN.

Reference

[1]Companies Act,2013 sec2,cl 71

[2] SANGEET KEDIA, Company Law, 45(edition for June 2020 exams, Pooja law publishing house 2020

[3]Public Limited Company Overview, MASTERS INDIA, https://www.mastersindia.co/gst/public-limited-companyoverview/#:~:text=As%20per%20the%20Section%20149,more%20than%20the%20prescribed%20limit.

[4] SANGEET KEDIA, Company Law (edition for June 2020 exams, Pooja law publishing house 2020)