Public company

INTRODUCTION

A public company can be incorporated as listed or unlisted, in which stake of shareholders is on a large scale. Shares of a listed public company can be freely traded on a stock exchange and over the counter market. It can accept deposits from the general public. To protect the stake of shareholders in a public company, the Government has imposed various rules and regulations of different acts on it.

As per the rules and regulations, limited liability is given to a public company’s owners and shareholders. A certificate of commencement of business is a must before starting the business of a public company. The Ministry of Corporate Affairs (MCA) has re-introduced the concept of commencement of business, vide Companies (Amendment) Ordinance, 2018, w.e.f. 2nd November, 2018. A company incorporated after the commencement of Companies (Amendment) Ordinance, 2018 and having share capital shall not commence business unless a declaration is filed by a director within a period of 180 days of the date of incorporation of the company, in such form as may be prescribed, with the Registrar.
 
DEFINITION

According to section 2(71) of the Companies Act, 2013, a “public company” means a company which is not a private company and has a minimum paid-up share capital, as may be prescribed.

Provided that a company which is a subsidiary of a company, not being a company, shall be deemed to be a private company for the purpose of this Act even where such subsidiary company continues to be a private company in its articles.

WHY INCORPORATE A PUBLIC COMPANY?

  • A public company can accept public deposits from the public
  • Shares are easily transferable
  • It can also raise funds through Initial Public Offering (IPO)
     

PROCESS OF INCORPORATION OF A PUBLIC COMPANY

  1. Obtain Digital Signature Certificate (DSC) for the proposed director(s): First of all, the basis requirement to incorporate a company is having a DSC as all the filings to the Registrar of Companies are made through an online application system which is appended with a valid DSC.
  2. Obtain Director Identification Number (DIN) for the proposed director(s): DIN is a unique director identification number allotted by the Central Government to any person intending to be a director of a company.
  3. Select suitable company name and make an application to the MCA for availability of name: The name of a public company shall end with the word ‘Limited’ and the proposed company name shall comply with the Company Name Availability Guidelines under the Companies Act, 2013.
  4. Capital requirements: There is no minimum capital (authorised or paid up capital) requirement for registering a public company. 
  5. Registered office: It is the principal place of business of the proposed company from where it can control its operations.
  6. Documentation & filing: Documents, such as Memorandum of Association (MOA) and Articles of Association (AOA), need to be drafted, signed and filed electronically, along with the fees applicable.
  7. Certificate of Incorporation: After scrutiny, the Central Registration Centre (CRC) issues a Certificate of Incorporation.

TIME REQUIRED

Generally, it takes 10-15 days from the date of application to get the Certificate of Incorporation from CRC.