Public Company Registration
Public Company Registration in India
Public company is a voluntary association of members.
Public Company has a separate legal existence apart from its members who compose it.
It is independent legal person, its existence is not affected by the death, retirement or insolvency of any of its shareholders.
For Public Company Registration must have a minimum of 7 members but there is no limit as regards the maximum number.
Public Company shares are freely transferable and that too without the prior consent of other shareholders.
These companies can invite capital and deposits from the public. These Companies can be listed or unlisted.
Eligibility for Public Company Registration
Minimum 7 Person
Minimum 7 people are required for public company registration in India.
These companies shall have minimum three directors.
The same seven people can become shareholder and director of the company.
However, maximum any number of people can become shareholder in the public company.
No Minimum Capital
Capital of the business is depending on the need of the business and statutory no minimum capital is required for public company registration.
However, minimum authorized and subscribed share capital required for public company is Rupees 5 lakh.
One Resident Director
Among director, one person must be resident Indian.
The name of the public company should be unique and should not be similar to the any existing company name or trademark.
Documents Required for Public Company Registration
- PAN Card for Indian Nationals (Mandatory)
- Passport for Foreign Nationals (Mandatory)
- Proof of nationality for Foreign Nationals
- Proof of Identity (Voter ID/Passport/Driving License) (any one)
- Resolution of the board of company / LLP for authorization of director/partner
- Passport size photo
- Bank statement / Electricity / Telephone / Mobile bill (not older than two months) (any one)
Registered Office Proof
- Conveyance/ Lease deed/Rent Agreement etc. along with rent receipts (any one)
Digital Signature Certificate (DSC)
- DSC form (physically signed)
Procedure for Public Company Registration
Reserve Name of Company
The first step in incorporation is to reserve/approve the name of company. The proposed name selected should do not contain any word which is prohibited under Companies Act, 2013. An approved name is valid for a period of 20 days from the date of approval, for a new company. It is permitted to apply for two proposed names and one Resubmission (RSUB) while Reserving Unique Names for companies through the RUN web service.
Take DSC of Director and Subscribers
Section 18 of the Information Technology Act, 2000 provides for use of Digital Signatures on the documents submitted in electronic form in order to ensure the security and authenticity of the documents filed electronically.
This is the only secure and authentic way that a document can be submitted electronically.
As such, all filings done by the companies under MCA21 e-Governance programme are required to be filed with the use of Digital Signatures by the person authorised to sign the documents.
Acquire DSC – A licensed Certifying Authority (CA) issues the digital signature. Certifying Authority (CA) means a person who has been granted a license to issue a digital signature certificate under Section 24 of the Indian Information Technology Act, 2000.
Register DSC – Role check for Indian companies is to be implemented in the MCA application. Role check can be performed only after the signatories have registered their Digital signature certificates (DSC) with MCA.
Approval of Other Regulators, (if required)
Proviso to Rule 12 of the Companies (Incorporation) Rules, 2014 provides that in case pursuing of any of the objects of a company requires registration or approval from sectoral regulators such as Reserve Bank of India, Securities and Exchange Board, registration or approval, as the case may be, from such regulator shall be obtained by the company before pursuing such objects and a declaration in this behalf shall be submitted at the stage of incorporation of the company.
Preparation of Documents & E-Application
Documents like Memorandum of Association, Articles of Association & other supporting incorporation documents and E-form for filing online application are prepared in house and then it is filed online on the portal of MCA21.
According to Section 7 of the Companies Act, 2013, all documents related to incorporation shall be filed before the Registrar, in whose jurisdiction registered office of a company is proposed to be situated. A Registrar may have jurisdiction over several states or only a part of a state.
Get Certificate of Registration, PAN and TAN
On receipt of the aforementioned documents, the office of the Registrar of Companies will scrutinise them and if they are found complete in all respects, the Registrar will register the company and generate a CIN. If the Registrar finds any defect or deficiency in any of the documents or forms, the Registrar will send an electronic communication pointing out the defects and after the deficiencies are removed, the Registrar will register the company.
After the registration of the company, the Registrar will issue under his hand and seal of his office, the Certificate of Incorporation in the name of the company and send it electronically. One may also take printout of the Certificate of Incorporation generated online. The date mentioned by the Registrar in the Certificate of Incorporation shall be the date of incorporation of the company, on which date the company will be considered to have come into existence as a legal entity separate from its subscribers.
The Certificate of Incorporation shall be in Form INC-11 of the Companies (Incorporation) Rules, 2014 and the Certificate Information shall mention permanent account number of the company where if it is issued by the Income Tax Department.
Open Bank Account
After getting the Certificate of Registration, public company can apply for opening a current account into bank for handling day to day transactions.
Benefits of Public Company Registration
Larger Borrowing Power
Public companies are most recognized in terms of financial assistance/borrowing from banks and financial institution and also there are several financial instruments available to public limited companies, which are not available to other form of business organization.
Liability of shareholders of the public company are limited only up to the shares subscribed by them and should not be personally liable for the debts of the company in case company are unable to pay its liabilities.
Separate Legal Entity
Public company legal entity are separate than its shareholders /promoters.
Public limited company existence will go for ever and its existence will not be effected by the death of shareholders, directors or transfer of shares to others.
Capacity to Sue and to be Sued
Public limited company can take legal action against another and also other person can take legal action against company separate from directors, shareholders & promoters.
Ownership of Property
Public limited company can sale, purchase and own the property like individual.
FAQ to Public Company Registration
What is Public Company?
“Public Company” means a company which—
(a) is not a private company [and];
(b) has a minimum paid-up share capital, as may be prescribed:
Provided that a company which is a subsidiary of a company, not being a private company, shall be deemed to be public company for the purposes of this Act even where such subsidiary company continues to be a private company in its articles.
What is Listed Public Company?
Listed Public Company means a public company which has any of its securities offered through an offer document listed on a recognized stock exchange and also includes Public Sector Undertakings whose securities are listed on a recognized stock exchange.
What is Unlisted Public Company?
Unlisted Public Company means a public company which none of its securities are offered through an offer document listed on a recognized stock exchange.
What are Major Annual Compliances for Public Company?
1. Annual Return in Form MGT-7 regarding the latest information about the directors and shareholders.
2. Financial Statements in Form AOC-4 to be filed with the Balance Sheet, Profit and Loss Account, Directors’ Report, Cash Flow Statement, Auditor’s Report, and the Consolidated Financial Statement.
3. Secretarial Audit Report in Form MR-3
4. Annual Compliances under SEBI Rules and Regulations associated.
5. Form MGT-14 for Adoption of Financials and Director’s Report.
6. Form MGT-15 regarding an exclusive report on the Annual General Meeting (AGM) of the company.
What is Annual Return under Companies Act 2013 for Public Company?
An annual return contains details about company’s share capital, indebtedness, directors, shareholders, changes in dictatorships, corporate governance disclosures etc. As per Companies Act, 2013, every company must prepare and file annual return with the registrar each financial year.
What are important event based compliance?
Following are important event based compliance:
1. Alteration in MOA and AOA
2. Appointments and resignations of directors
3. Company Name Change
4. Change of company registered Address
5. Change in the authorized capital of a company
6. Share consolidation or sub-division
7. Issue of shares
What are due date for filing of public company Annual Returns?
Form MGT-7 is to be filed within 60 days from the date of Annual General Meeting of the company. However, the due date for AGM is on or before the 30th day of September following the close of every financial year. So, the last date for filing form MGT-7 will be 30th November every year unless extended by MCA.
Who will sign the Annual Return of public company?
As per section 92 of Companies Act 2013, annual return for a company has to be signed by a director and the company secretary, or where there is no company secretary, by a company secretary in practice.
Can we file annual return of public company, if annual accounts of the company is not audited?
What are the penalty for late or non filing of annual return of public company?
1. Late filing – Rs 100 per day as “ penalty “ upto maximum Rs 5 Lac + company and its officers who is in default shall be liable to pay penalty of Rs 50000.
2. Non-filing – Non Filing for continuous period of three financial years will leads to disqualification of Directors.
Additionally, after the companies amendment act 2019, Delay filing of annual returns will also amount to adjudication by ROC after issuing of Show Cause Notice.
Where a public company can hold AGM?
As per section 96 of Companies Act, 2013, AGM of companies shall be held either at the registered office of the company or at some other place within the city, town or village in which the registered office of the company is situated.
However, after amendment dated 13/06/2018 under Companies Act 2013, AGM of an unlisted company may be held at any place in India if consent is given in writing or by electronic mode by all the members in advance.
Who will sign the Directors Report of public company?
The Board’s report and any annexures thereto shall be signed by its chairperson of the company if he is authorised by the Board and where he is not so authorised, shall be signed by at least 2 directors, one of whom shall be a managing director, or by the director where there is one director.
Who can sign the financial statement of public company?
The financial statement, including consolidated financial statement, if any, shall be approved by the Board of Directors before they are signed on behalf of the Board at least by the chairperson of the company where he is authorised by the Board or by two directors out of which one shall be managing director and the Chief Executive Officer, if he is
a director in the company, the Chief Financial Officer and the company secretary of the company, wherever they are appointed, or in the case of a One Person Company, only by one director, for submission to the auditor for his report thereon.
What are rules for Board meeting of public company?
Every company shall hold the first meeting of the Board of Directors within 30 days of the date of its incorporation and thereafter hold a minimum number of 4 meetings of its Board of Directors every year in such a manner that not more than 120 days shall intervene between two consecutive meetings of the Board.
However, Central Government may, by notification, direct that the provisions of this sub-section shall not apply in relation to any class or description of companies or shall apply subject to such exceptions, modifications or conditions as may be specified in the notification.
What are rules for AGM of public company?
Every public company shall in each year hold in addition to any other meetings, a general meeting as its annual general meeting (AGM) and shall specify the meeting as such in the notices calling it, and not more than 15 months shall elapse between the date of one AGM of a company and that of the next.
In case of the first AGM, it shall be held within a period of 9 months from the date of closing of the first financial year of the company and in any other case, within a period of 6 months, from the date of closing of the financial year.
If a company holds its first AGM as aforesaid, it shall not be necessary for the company to hold any AGM in the year of its incorporation.
The Registrar may, for any special reason, extend the time within which any AGM, other than the first AGM, shall be held by a period not exceeding 3 months.
‘Minutes’ means a record of the proceedings of a meeting. Minutes should contain a fair and correct summary of the proceedings of the Meeting.
Every public company shall cause minutes of the proceedings of every general meeting of any class of shareholders or creditors, and every resolution passed by postal ballot and every meeting of its Board of Directors or of every committee of the Board, to be prepared and duly signed in prescribed manner and kept within 30 days of the conclusion of every such meeting concerned, or passing of resolution by postal ballot in books kept for that purpose with their pages consecutively numbered.
Every company shall observe secretarial standards with respect to general and Board meetings specified by the Institute of Company Secretaries of India constituted under section 3 of the Company Secretaries Act, 1980, and approved as such by the Central Government.
Who will sign the minutes of public company?
Each page of every minutes book shall be initialed or signed and the last page of the record of proceedings of each meeting or each report in such books shall be dated and signed –
(a) in the case of minutes of proceedings of a meeting of the Board or of a committee thereof, by the chairman of the said meeting or the chairman of the next succeeding meeting;
(b) in the case of minutes of proceedings of a general meeting, by the chairman of the same meeting within the aforesaid period of 30 days or in the event of the death or inability of that chairman within that period, by a director duly authorised by the Board for the purpose;
(c) In case of every resolution passed by postal ballot, by the chairman of the Board within the aforesaid period of 30 days or in the event of there being no chairman of the Board or the death or inability of that chairman within that period, by a director duly authorized by the Board for the purpose.