SHAREHOLDER: For incorporating a public limited company minimum seven people are required as a shareholder of the company. The minimum shareholder of the company is 7, but there is no maximum limit of the shareholder. The companies have to maintain the minimum shareholder limit during its life. If anytime during the life of the company this limit falls below the required threshold then the company has to continue the minimum shareholder limit with six months again. An individual can be the shareholder of the company as well as any other company can also purchase the shares of the company.
DIRECTOR: Minimum 3 directors are required in a public limited company, and the maximum limit is 15. This maximum limit can be increased only after the approval of the shareholder in the meeting of the company. Just the individual person can be appointed as the director of the company and only the shareholders having the right to elect the directors of the company in the general meeting of the company. Among all the directors at least one director shall be the resident of India and must stay in India for at least 182 days in a year.
CAPITAL: In the public limited company there is no minimum capital requirement. In the former act, i.e., Companies Act, 1956 the public limited company needs to maintain minimum capital of Rs. 5,00,000/- . For promoting business in India, the government has removed this provision.
DIGITAL SIGNATURE: Minimum seven shareholders and three directors are required to incorporate the public limited company, and all these people shall have the digital signature certificate (DSC) at the time of incorporation. The company registration process is online, now the form is converted into physical forms to e-forms, and all these e-forms required a digital signature for signing the forms. Hence without DSC, a company cannot get registered.
REGISTERED OFFICE: The companies must have a registered office which should be mentioned in every document of the company. The company will receive all the legal documents and notices at its registered office. Every company shall maintain a registered office if a company wants to change its office then it can be possible with the registrar approval.
BUSINESS ACTIVITY: Any business can be conducted in the company, but the business activity of the company shall not be illegal. The company can change its business activity any time during the life of the company only after taking approval from the shareholders of the company in the general meeting.
NAME OF THE COMPANY: The public limited company contains the word “limited” or “ltd” at the end of the name. For example, there is a company XYZ CONSTRUCTION LIMITED here XYZ is the initial name of the company and CONSTRUCTION word denote the business activity of the company, and it is mandatory to insert the business activity in the name of the company and at the end LIMITED word indicates that the company is a public limited company.
LIMITED LIABILITIES: There is no limit on the maximum number of the shareholder in the company, and all these shareholders enjoy the limited liabilities benefit which means the shareholders and director of the company having limited liabilities. They are not personally liable for any debt and loss owned and incurred by the company as the identity of the shareholder, and the company is different from each other.
BORROWING CAPACITY: Raising fund is quite easy for the public limited company as they can invite the general public for investing their funds in the company. Banks and financial institutions also rely on the public limited company as the company needs to follow all the rules and regulations made under different laws.
SHARE TRADING FACILITY: The shares of the public limited company are readily available on the market, and it can be traded easily through the stock exchange. For public involvement, this facility provided under public limited company only so that the general public can take part in the company.
LIQUIDITY: As the shares of public limited companies are readily available in the market the selling of shares are also very easy hence the company always gives the best liquidity option to its shareholders. If any shareholder wants to sell the shares, he can directly sell it in the share market without following any complex provision.
EXPANSION OPTION: As the company has many options for raising fund and due to funding advantage the company having a big prospect for its expansion. An expansion needs the fund and company are capable of raising funds. Due to this option the company can:
- Enter into a new project
- Purchase new technology
- Take steps in research and development for new technology
- Write off or pay off its all liabilities and debts
- Expand its brand value
- Enter into another or global market
- Starts working in a different sector also; and many other options
MORE CREDITABILITY: The public limited company runs its business and operations under strict legal regulations due to which it is having more creditability as compare to another form of company. Due to different norms under a different law, the company has to maintain the transparency between the company and all its stakeholders.
BETTER MANAGEMENT: The management of the company is handled by a small group of people known as the board of directors. The directors are responsible for the shareholders of the company, and they have to answer all the queries and company status to its shareholders.
- SHAREHOLDER: Minimum 7 seven shareholders are required
- DIRECTORS: Minimum 3 directors are required
- CAPITAL: No minimum requirement for the capital
- REGISTERED OFFICE: Mandatory to have a registered office address
As per Companies Act, 2013 there should be at least 3 directors in the Public Limited Company but the maximum limit will be 15. If a company wants to increase the limit of the directors in the company then it should have to take prior approval of shareholders of the company in the general meeting.
Yes, the section-8 company can change its business activity but it should be for social welfare, but if the company changed its activity from non-profit making purpose to profit-making purpose then firstly it should have to change its status from section-8 company to either private limited or public limited
The minimum limit is either 2 if it is registered as a private limited company or 3 if it is registered as a public limited company.
There are some mandatory annual compliance for section 8 company that are required to be done every year like:-
- Open a bank account and deposit the paid-up capital
- Submit Form INC-20A within 180 days from its registration
- Appoint auditor within 30 days from its registration
- File annual report and financial statement after the completion of one financial year
- File Income Tax Return for the period of one financial year.
- Intimate the ROC regarding any changes in the company
Yes, any NRI or foreign citizen can incorporate a section-8 company in India and can be appointed as a director in the company but at least one director in the section-8 company shall be an India Citizen and must reside in India for the period of at least 182 days in a year.
No, the section-8 company cannot distribute its profit to its member it can only use it for its objective.
Yes, but before taking any foreign donation it should first have to take FCRA registration from the RBI.
Yes, if any time the central government thinks fit that the company has violated any condition for issuing the license or the company is using its profit for the distribution among the member or the motive become the profit-making then the central government can cancel or revoke its license issued.
- There is no time limit for the validity of the license and registration certificate of the section-8 company, it is valid until the company continues its function.