FAQs- Public Limited Company

Can a startup be registered as a Public Limited Company?

No, the public limited company is not eligible to start up

How many Persons are required to incorporate a public limited company?

A Public Limited Company must have a minimum of three Directors and seven shareholders.

Can NRIs/Foreign Nationals be a Director in Public Limited Company?

Yes, an NRI or Foreign National can be a Director in a Public Limited Company after obtaining Director Identification Number. However, at least one Director on the Board of Directors must be a Resident of India.

How can a subsidiary of a Foreign Company be incorporated as a Public Limited Company in India?

In case of wholly owned subsidiary, a copy of the Board resolution of Holding Company approving the investment in the proposed Indian Company and authorizing a person to sign the incorporation papers on behalf of the company, duly attested by the officer of the Indian Embassy in the foreign country where the registered office is situated is also required to be attached with the papers.

Can a Minor become a Director of the company?

No, as per the Act, it is mandatory that the director needs to be at least 18 years of age.

Does the director of a Public Limited Company have any obligations to pay off the creditors of the company?

No, being a limited liability entity, the liability of a member of a company is limited to the face value of the shares the member owns. Upon payment of the whole of the face value, he has no obligation to contribute anything to pay off the creditors of the company.

Can a shareholder of company involve in business and management of a Company?

The shareholders of a company do not have the right to participate in the day-to-day management of the business of a company. This ensures separation of ownership from management.

Who is the ultimate person governing a Public Limited Company?

The power of decision making in a company is vested in the Board of Directors, and all policy decisions are taken at the Board level by the majority rule. This ensures a unity of direction in management.

What is the difference between authorized capital and paid-up capital?

The authorized capital is the capital limit authorized by the Registrar of Companies up to which the shares can be issued to the members/public, as the case may be. The paid up share capital is the paid portion of the capital subscribed by the shareholders.

Is it mandatory for a Director to be in India for registration of a Public Limited Company?

No, it is not mandatory for a Director to be in Person in India for the formation of a Company. He is permissible to give Power of Attorney to a person to sign the documents on his behalf. After the Company is incorporated, he can appoint Alternate Directors, to function on his behalf if he is not in India. A Board meeting in the very first month after the incorporation of the company is mandatory and the appointment of additional directors on his behalf can be made at the initial Board meeting. For this purpose, the director who is outside in India shall be here for the easy proceedings.

What is the term “Further Issue of shares “means?

In a Public Company, the company can offer the further issue of shares to its existing shareholders as right shares. The offer is subject to the approval of the existing shareholders and that to be ratified by the public in a general meeting only. It is pertinent to note that the further issue of shares cannot be issued to the Directors or any specific person, it should be made in Public and require approval in a public general meeting.

Is the Board meeting of a Public Limited Company mandatory?

Yes, a Public Company must call its statutory Meeting and file Statutory Report with the Register of Companies. It is worth to note here that, the meeting of a Public Limited Company can be qualified as a Meeting only if the desired quorum of members is present unless the meeting is not considered as valid. In case of a Public Limited Company, five members must be present personally to constitute a quorum. However, the Articles of Association may provide any number of members more than the required under the Act.

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