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Public Limited Company is the company that issue securities through Initial Public Offer (IPO) and should be the preferred choice of business in India if planning to raise funds from the general public because public limited companies have got privileged under Securities Laws to access capital market. The Public Limited Company is considered to be more transparent as many more disclosures are required. The share can be transferred without any hassle.
Public Limited Companies in India are a destination point for Foreign Direct Investment (“FDI”), because, under Foreign Exchange Laws, there are the areas open for public limited companies to attract foreign loans and equity participation.
A Public Limited Companies have following features:
Only Public Limited Companies can accept Deposits from public under Companies Act, 2013.
ADVANTAGES OF PUBLIC LIMITED COMPANY
A company is a legal entity and a juristic person established under the Act. Therefore a company form of organization has wide legal capacity and can own property and also incur debts. The members (Shareholders/Directors) of a company have no liability to the creditors of a company for such debts.
A company has 'perpetual succession', that is continued or uninterrupted existence until it is legally dissolved. A company, being a separate legal person, is unaffected by the death or other departure of any member but continues to be in existence irrespective of the changes in membership.
A company enjoys better avenues for borrowing of funds. It can issue debentures, secured as well as unsecured and can also accept deposits from the public, etc. Even banking and financial institutions prefer to render large financial assistance to a company rather than partnership firms or proprietary concerns.
Shares of a company limited by shares are transferable by a shareholder to any other person. Filing and signing a share transfer form and handing over the buyer of the shares along with share certificate can easily transfer shares.
A company being a juristic person, can acquire, own, enjoy and alienate, property in its own name. No shareholder can make any claim upon the property of the company so long as the company is a going concern.
Limited Liability means the status of being legally responsible only to a limited amount for debts of a company. Unlike proprietorships and partnerships, in a limited liability company the liability of the members in respect of the company's debts is limited.
COMPLIANCES AFTER THE INCORPORATION OF PUBLIC LIMITED COMPANY
1. Apply for Sales Tax / Service Tax Registration based on the nature of Business.
2. No intimation required to be given to ROC in case of First Auditors. Form ADT 1 to be filed within 15 days of 1st AGM of the Company
3. Filing Income Tax Return of Company on or Before 30th September every year
4. To maintain proper Books of Accounts
5. To Maintain Minutes Book and Statutory Registers
6. To Comply with SS-1 and SS-2 (Secretarial Standards)
7. Get your account books Audited Every Year
8. Filing of form MGT- 7 and AOC-4, AOC- 4 XBRL every Year
PENAL PROVISIONS FOR NON COMPLIANCE IN PUBLIC LIMITED COMPANY
1. If a company does not maintain proper books of accounts then the company and every officer of the company who is in default shall be punishable with fine which shall not be less than fifty thousand rupees but which may extend to three lakh rupees and where the failure is a continuing one, with a further fine which may extend to one thousand rupees for every day, after the first during which the failure continues.
2. If a company fails to file Form AOC-4 within time, the company shall be punishable with fine of one thousand rupees for every day during which the failure continues but which shall not be more than ten lakh rupees.
3. If a company fails to file Form MGT-7 before the expiry of the prescribed period, then the company shall be punishable with fine which shall not be less than fifty thousand rupees but which may extend to five lakhs rupees and every officer of the company who is in default shall be punishable with imprisonment for a term which may extend to six months or with fine which shall not be less than fifty thousand rupees but which may extend to five lakh rupees, or with both.
4. If a company fails to maintain Minutes Book of the company, then the company shall be punishable with fine which may extend to Twenty Five Thousand rupees and every officer of the company who is in default shall be punishable with fine which which may extend to five thousand rupees.
5. If a company fails to maintain Register of Members of the company, then the company shall be punishable with fine which shall not be less than Fifty Thousand and which may extend to Two lacs rupees and every officer of the company who is in default shall be punishable with fine of One Thousand Rupees till the default continues.
6. If a company fails to maintain Register of Charge of the company, then the company shall be punishable with fine which shall not be less than One Lac rupees and which may extend to Ten lacs rupees and every officer of the company who is in default shall be punishable with imprisonment of 6 motnhs or with fine which shall not be less than Twenty Five thousand rupees and which may extend to One lac rupees, or both.
7. If a company fails to maintain Register of Director of the company, then the company shall be punishable with fine which shall not be less than Fifty Thousand rupees and which may extend to Three lacs rupees.
Frequently Asked Question's
1. Limit on Number of Directors (Minimum 3, Maximum 15)
2. Limit on No of Promoters / Share Holders (Minimum 7, Maximum No limit)
3. Alteast One Director Should be Resident in India
4. PAN is Not Required in case of Foreign Residents
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