Requirements for Incorporation of a Public Limited Company

A Public Limited Company is a type of company whose securities can be traded on a stock exchange and can be bought and sold by anyone. Public companies are strictly regulated, and are required by law to publish their complete and true financial position so that investors can determine the true worth of its stock.

Listed below are the requirements for incorporating a Public Limited Company:

1. Directors and Shareholders:

A Public limited company requires having a minimum of three directors and seven shareholders. However, there is no maximum number of shareholders for a public limited company through the maximum number of Directors is not to exceed beyond fifteen. Though Foreign National or NRIs can be a director of a public limited company, any one of the directors should be a resident Indian citizen. It is very important to note here that no minor can be a director of the company.

2. Capital:

The minimum capital required to form a public limited company is Rs.500, 000/- However, as per the Act, this limit is not applicable to companies having a license under section 25.

For a public limited company is concerned, the capital requires further more explanation as there are three other capitals which are also involved. The amount of capital mentioned in the Memorandum of Association is termed to be an Authorized Capital.

Authorized Capital is the maximum amount of shares that a company can offer to its shareholders. The authorized capital of a company can be increased or decreased as per procedures and provisions in the Companies Act of 2013. The minimum authorized capital for a public limited company is Rs. 5 Lakhs.

The list below are the three other Capitals which are also involved:

  1. Issued Capital: The total value of shares issued by a company for its shareholders to subscribe
  2. Paid-up Capital: The value of shares subscribed by the shareholders, this can be fully subscribed. However, the total paid-up capital cannot exceed the authorized capital of the company. Earlier, the minimum paid-up capital for a public limited company was Rs.5 Lakhs and the same was lifted by the government by an amendment to the Companies Act made in 2015. There is no minimum paid-up capital for a public limited company now.
  3. Uncalled Capital: This is the total value of shares after subscriptions by shareholders. The term is irrelevant if the entire issued share of a company is subscribed.

3. Director Identification Number (DIN):

DIN for all the directors are mandatory as the documents of the company should be ratified by all of its Directors presented in a Board Meeting constituted in regular intervals of time.

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