Public Limited Company Incorporation

Public company is a company which is not a private company and doesn’t have any prescribed minimum capital limit. A Private company which is subsidiary of a public company shall be deemed to be public company for the goal of this Act, even where such ancillary company continues to be a private company in its articles. A public limited company is a team that has acknowledgment to offer its securities for sale to public, typically through a stock exchange, or sometimes a company whose stock is traded through different market makers.

  • A public limited must have at least seven shareholders.
  • A public company needed to have at least three directors
  • A public company is not authorized to commence business upon the issue of incorporation certificate. It has to obtain commencement of business certificate.
  • It must issue a prospectus or file a statement in lieu of a prospectus before starting business transactions.
Advantages of public Limited company
  • Public limited Company can mobilize more capital as there is no limit to the number of shareholders
  • There is no restriction in the transferability of shares and the public limited company can mobilize funds from public.
  • Borrowing power in case of public limited company is very high.
Disadvantages of public Limited company
  • Cost involved in forming a Public Limited company is very High and Compliance norms are also vast in case of a public limited company.
  • Promoters have no control in the ownership in case of public limited company
  • There is loss of control in business
  • Taking a decision is very difficult and there may be disagreement between parties to the contract
  • Lots of statutory regulations to complied with.
  • Disclosure of financial among public is mandatory.