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What is a Public Limited Company? If you’re planning to start a big business or want to raise money from the public, …
If you’re planning to start a big business or want to raise money from the public, you might have heard the term Public Limited Company. But what does it really mean? In this blog, we’ll explain what a Public Limited Company is, how it works, and why many large businesses choose this structure. Don’t worry—we’ll keep it simple and easy to understand, even if you don’t have a background in business or law. Let’s get started!
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A Public Limited Company (PLC) is a type of business that can sell its shares to the general public through the stock market. This means anyone can invest in the company and become a shareholder. A Public Limited Company usually has many shareholders and is often used by big businesses that want to raise large amounts of money.
On the other hand, a Private Limited Company is smaller and its shares are not open to the public. Only a few selected people (like family, friends, or private investors) can own shares in a private company.
The key difference between the two is who is allowed to buy shares. Public Limited Companies are more transparent and have to follow stricter rules because they handle public money. Private Limited Companies have fewer rules to follow and more privacy.
In simple words: Public = open to everyone, Private = limited to a few.
A Public Limited Company (PLC) has some special features that make it different from other types of businesses.
First, this company can raise funds through stock market by selling its shares to public. This helps the company raise a large amount of money for business growth.
Second, seven shareholders and three directors is mandatory to get started. Adding “Limited” and “Ltd” is mandatory at the end of its name.
Another key point is that a Public Limited Company has to follow strict rules and regulations. It must share its financial details with the public, hold regular meetings, and file reports with government authorities. This builds trust with investors.
In short, a PLC is transparent, large-scale, and publicly accountable, making it a great choice for businesses that want to grow big and build credibility.
In India, a minimum of seven shareholders you needed to start a Public Limited Company. They become part-owners of the business. There’s no maximum limit on the number of shareholders, which means a PLC can grow very big and have thousands of investors over time.
A Public Limited Company has at least three directors to manage the business. The shareholders and directors can either be the same individuals or different people, depending on how you set up the company.
This setup is great for businesses that plan to raise a large amount of money from the public. By allowing more investors, a PLC can collect funds quickly and expand easily.
There are many good reasons to register your business as a Public Limited Company (PLC), especially if you want to grow big. A PLC can raise money from the public by selling shares on the stock market and this one of the biggest advantage of the company. This helps the company collect large funds for expansion, new projects, or other big goals.
Another benefit is limited liability. This means the personal money of shareholders is safe. If the company faces a loss, shareholders are only responsible for the amount they invested.
A Public Limited Company also has better credibility and trust. Since it follows strict rules and shares its financial reports openly, banks, investors, and the public feel more confident dealing with it.
In short, a PLC is ideal for companies that want to grow faster, raise more money, and build a strong brand image in the market.
Although a Public Limited Company (PLC) offers many benefits, it also comes with certain challenges. One major disadvantage is that a PLC must follow strict rules and regulations. It needs to file regular reports, hold annual general meetings, and share financial information with the public. This can be time-consuming and needs expert handling.
Another challenge is less privacy. Since the company is listed on the stock market, everything from profits to decisions becomes public. Decision-making can become slow and complicated, when there are so many shareholders involved.
There’s also the risk of losing control. If too many shares are sold to the public, the original owners may not have full control over the business anymore.
In simple terms, while a PLC helps raise big money, it also needs more paperwork, more public attention, and careful management. It’s a good choice only if your business is ready for that level of responsibility.
Starting a Public Limited Company (PLC) in India involves a few important steps, but don’t worry—it’s quite manageable with the right guidance. First, you need minimum 7 shareholders and 3 directors as we talk before. DIN and DSC is mandatory.
Next, you must choose a unique company name and get it approved through the MCA (Ministry of Corporate Affairs). After that, you’ll need to prepare and file the necessary documents, like the Memorandum of Association (MOA) and Articles of Association (AOA), which explain the company’s goals and rules.
Once everything is submitted, the MCA will review and, if all is correct, issue a Certificate of Incorporation. After getting this certificate, you can apply for a PAN, TAN, and GST registration, and open a bank account.
A Public Limited Company (PLC) can raise funds by selling its shares to the public through the stock market, which we called IPO or Initial Public Offering in stock market. In simple words, the company offers a portion of its ownership (called shares) to people who want to invest.
Before launching an IPO, the company has to get permission from SEBI (Securities and Exchange Board of India). It must also prepare a draft prospectus—a document that explains the company’s goals, financial status, and how it plans to use the money.
Once SEBI approves, the company lists its shares on a stock exchange like BSE or NSE, allowing the public to buy and sell those shares.
This method helps the company collect large amounts of money for growth, expansion, or clearing debts. In short, a Public Limited Company uses the stock market to bring in public money and take the business to the next level.
A Public Limited Company (PLC) in India has to follow strict compliance requirements to ensure everything is legally correct and transparent. First, the company must hold an Annual General Meeting (AGM) every year and maintain records of these meetings.
The company must also prepare and submit annual financial statements to the Ministry of Corporate Affairs (MCA). These statements include the balance sheet, profit and loss account, and auditor’s report. The company must also have its accounts audited by a registered auditor.
A PLC is required to file quarterly and yearly financial reports with the stock exchange and disclose information about its operations and financial performance. Directors must also ensure that the company complies with tax laws, labor laws, and other business regulations.
In simple terms, the company must maintain full transparency, follow legal rules, and make regular public disclosures to stay compliant. This fosters trust and ensures the business runs efficiently.
Incorporating a Public Limited Company offers great potential for growth and raising capital. However, it comes with responsibilities, such as strict compliance with Indian laws and managing a large number of shareholders. If you’re considering this route, Public limited company registration in Rajasthan could be an excellent choice for expanding your business. By understanding the pros and cons, you can make informed decisions to set up a company that stands out in the market.
At E Accountax Manager, we specialize in business registration in Rajasthan and offer expert assistance in setting up your Public Limited Company. Our experienced team helps you navigate the registration process, ensuring full compliance with Indian laws. We provide personalized support to help your business grow and succeed. Let us handle your problems, so you can focus on growing your business.
CA Jitendra Agarwal, a Chartered Accountant, is an experienced Income Tax Advisor with a proven track record in tax planning and compliance.
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