A Public Limited Company is a Company limited by shares in which there is no restriction on the maximum number of shareholders, transfer of shares and acceptance of public deposits.
The liability of each shareholder is limited to the extent of the unpaid amount of the shares face value and the premium thereon in respect of the shares held by him. However, the liability of a Director/Manager of such a Company can at times be unlimited. The minimum number of shareholders is 7.
The most obvious advantage of being a public limited company is the ability to raise share capital, particularly where the company is listed on a recognized exchange.
Since it can sell its shares to the public and anyone is able to invest their money, the capital that can be raised is typically much larger than a private limited company.
It’s also possible that having stock listed on an exchange could attract investment from hedge funds, mutual funds and other institutional traders.
Offering shares to the public gives the opportunity to spread the risk of company ownership among a large number of shareholders. This may allow early investors in the company to sell some of their own shares at a profit while still retaining a substantial stake in the company.
Obtaining capital from a wide range of investors has some advantages over relying on one or two "angel investors", as many private companies will choose to do to facilitate growth. While an angel investor may provide a large amount of capital and expertise, the founders may not be comfortable with the level of influence over the company’s direction that the angel will often expect.
As well as share capital, a public limited company will often find itself in a better position when looking at other potential sources of finance.
The demands of being a public limited company and maintaining a stock exchange listing, for example, can help to improve a company’s creditworthiness when issuing corporate debt (and therefore reduces the return the company needs to offer investors).
Banks and other financial institutions may be more willing to extend finance to a public limited company, particularly one that is listed. The company could also be in a better position to negotiate favourable interest rates and repayment terms on loans.
The value of being able to raise finance is in how it can be employed to serve the business. By having more finance potentially more readily available and on better terms than a private company, the public limited company I can be in an advantaged position to:
Whether deserved or not, having “PLC” at the end of a company name can add standing and prestige. There is a sense of status about a public limited company that its private company counterpart just doesn’t quite have, which can affect how the business is viewed. While often more imagined than real, this perception of being more established, larger or more powerful can affect the behavior of customers, suppliers and employees.
More people are likely to be aware of the company if it is public, particularly if it’s listed on a stock exchange. In that case, it’s more likely to receive attention from the media and investment professionals. This is effectively free publicity, meaning more people will recognize the company and its products or services. Better brand recognition can lead to more sales. It may also make you more visible to valuable potential business partners.
Credibility and confidence are reinforced by:
The shares of a public limited company are more easily transferable than those in the private equivalent, meaning shareholders benefit from liquidity. If shares are quoted on a stock exchange, shareholders and potential shareholders will generally find it easier to transfer shares in the company – although the market still relies on willing purchasers and sellers being available.
The fact the shareholders are less bound to remain with the company can give them comfort – and may help the company by making people more willing to invest.
Without restrictions on transferability of shares that often apply in private companies, it’s also easier to deal with situations like a shareholder’s death, allowing shares to be transmitted in line with the terms of any will.
Going public can enhance the options for the founders to exit the business at some point in the future, if they wish to do so. Both higher transferability of shares and the increased visibility of the business and its performance may increase the chances of bid interest from potential suitors.
Obtain Digital signature of one of the promoter/director.Obtain DIN of at least three directors.
After obtaining approved DIN file Form 1A with ROC for name availability. If name is available ROC give name with in 3 days from the date of assigning. U will print at least two MOA and AOA. File Form 1, 18, and 32 with the concerned ROC with the prescribed as given in Schedule X .
After verification of documents of incorporation, ROC generate the Company Identification Number(CIN) and issue certificate of Incorporation at the registered address of the company