PUBLIC AND PRIVATE LIMITED COMPANY INCORPORATION

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Private / Public Limited Company Incorporation

A private limited company is a company privately held for small businesses. This type of business entity limits owner liability to their shareholdings, the number of shareholders to 200, and restricts shareholders from publicly trading shares. A company whose securities are traded on a stock exchange and can be bought and sold by anyone. Public companies are strictly regulated, and are required by law to publish their complete and true financial position so that investors can determine the true worth of its stock (shares). Also called publicly held company.

Advantages for incorporation of Private Limited Company

  • Limited risk to personal assets

The shareholders of a private limited company have limited liability. This means that as a shareholder you will be liable to pay for company’s liability only to the extent of the contribution made by you.

  • Legal Entity

A PLC has a separate legal entity different from you. This means that the Company is responsible for the management of its assets and liabilities, debtors and creditors. And you are not responsible for it. So, the creditors cannot proceed against you to recover the money.

  • Raising Capital

Even though registering a PLC comes with compliance requirements, it is preferred by entrepreneurs as it helps them raise funds through equity, expand and at the same time limits the liability.

  • Trustworthiness

Companies in India are registered with the Registrar of companies (ROC) under Companies Act 2013. Anyone can check the details of the company through Ministry of Corporate Affairs (MCA). Also, details of all the directors are provided while the formation of the company. Hence a PLC form of business structure is trusted more.

  • Continue Existence

A company has ‘perpetual succession’, that is continue or uninterrupted existence until it is legally dissolved. A company, being a separate legal person, is unaffected by the death or cessation of any member but continues to be in existence irrespective of the changes in membership.

Different forms of company registration

There are other forms of company registration such as

  • Partnership Firm Registration
  • Proprietorship Firm Registration
  • Limited Liability Partnership (LLP) Registration
  • One Person Company (OPC) Registration
  • NGO Registration ( Section 8 Company Registration )

 

Public Limited Company

A public limited company is a company that has permission to offer its registered securities for sale to the general public, typically through a stock exchange, or occasionally a company whose stock is traded over the counter (OTC)via market makers who use non-exchange quotation services.

A public company is defined as a company which is not a private company. The following conditions apply only to a public company:

  • It must have at least seven shareholders.
  • A public company is not authorized to begin business upon the grant of the certificate of incorporation. In order to be eligible to start business as a corporation, it should obtain another document called “trading certificate”.
  • It should publish a prospectus or file a statement in lieu of a prospectus before it can start transacting business.
  • A public company is needed to have at least three directors.
  • It should hold statutory meetings and obtain government approval for the appointment of the management.

 

Advantages of a Public Limited Company

  • The shareholders have limited liability.
  • A company can raise additional capital by issuing more shares or debentures.
  • Greater borrowing power.
  • A board of directors with experience/ expertise can be appointed.

 

Documents Required for Public Limited Company

  • 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)
  • Articles of association (AOA)

 

Documents for Private limited Company Incorporation

  • PAN card of each Director and Shareholder.
  • Two Photographs of each Director and Shareholder.
  • Identity Proof of each Director and Shareholder. – Aadhaar Card/ Election I-Card/ Driving License.
  • Resident proof of each Director and shareholder. – Utility Bills (Electricity/Telephone/Water/Bank Statement).
  • Address proof of the Registered Address of Company – Rent Agreement and Utility Bill of same address in name of landlord. -NOC from the landlord/director.