PUBLIC COMPANY Registration

What is PUBLIC COMPANY Registration?

In simple terms, a public company is a company whose shares can be subscribed by members of the public. As per the Companies Act, 2013 a public company is

• A company that is not a private company

• Has a minimum of seven members, no maximum limit is mentioned

• Has a minimum paid-up capital of five lakhs, again there is no maximum limit

• A private company that is a subsidiary of a public company, will be considered a public company

There are certain documents required to be filled by a public company with the Registrar of companies, so let us take a look at these documents:

• Memorandum of Association: This is the constitution of a company. States the objective of the company, the total capital, the name of the company, the registered address etc.

• Articles of Association: This document contains rules and regulations of the internal management of the company.

• Prospectus: Because the company wishes to invite funds from the public it must register and issue a prospectus or a document in liu of a prospectus. Any material misstatement in the prospectus by the directors, promoter, or the experts is a criminal liability.

Characteristics of Public Limited Company:

1. Members: To start a company, a minimum number of 7 members are required and no restrictions on maximum number of members as per the provisions of the Companies Act, 2013.

2. Limited Liability: The liability of each member or shareholders is limited. It means that if a company faces loss under any circumstances then its shareholders are liable to sell their own assets for payment. The personal, individual assets of the shareholders are not at risk.

3. Perpetual succession: The Company keeps on existing in the eyes of law even in the case of death, insolvency, the bankruptcy of any of its members. This leads to perpetual succession of the company. The life of the company keeps on existing forever.

4. Index of members: A public company is required to maintain an index of its members whereas private company has a privilege over the public company as they don’t have to keep an index of its members.

5. A number of directors: When it comes to directors a public company needs to have only three directors. With the existence of 3 directors, a public company can come into operations.

6. Paid up capital: It must have a minimum paid-up capital of Rs 5 lakh or such higher amount which may be prescribed from time to time.

7. Prospectus: Prospectus is a detailed statement of the company affairs which is issued by a company for its public. Thus, in the case of Public limited company, there is a need to issue a prospectus. However, in case of Private limited Companies, public is not invited to subscribe for the shares of the company.

8. Minimum subscription: It is the amount received by the company which is 90% of the shares issued within a certain period of time. If the company is not able to receive 90% of the amount then they cannot commence further business. In case of private limited company shares can be allotted to the public without receiving the minimum subscription.

9. Name: It is mandatory for all the Public companies to use the word limited after its name.