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Public Limited Company

The top of the hierarchy in business associations, Public Limited Companies are formed by organizations that require mobilization of large capital and a large subscriber base. These Companies are governed by the stringent laws of Companies act 2013 and have provisions to protect the interest of all stake holders.

The main advantages of forming a Private Limited Company are that it offers the business a separate existence from the shareholders. i.e. the business is completely stood alone and all agreements and transactions are carried out in the name of Company itself. This form of business organization also offers the added advantage of Limited Liability and the liability of the shareholders is limited to the amount share allotment money paid by them.

Advantages over Private Limited Company.

  • For a Company to raise funds from the Public it has to be Public Limited Company.
  • Shares are freely transferable and No restrictions can be placed of them.
  • All listed Companies are Public Limited Companies and there is no restriction on the number of Members

Disadvantages

  • Companies are generally taxed at a higher rate that other forms organization. Companies are subject to Minimum Alternate tax surcharge. While dividend (appropriation of profit) is also taxed in the hand of the company at 15%.
  • Public Companies are heavily regulated by the Companies act. Some actions even require the Central Government approval. Hence Compliance costs are quite high.
  • There are restrictions on raising capital, paying managerial remuneration etc. This makes Public limited companies relatively inflexible as compared to other type of Organization.
  • There has to be a minimum of 7 members and 3 directors.
  • Paid up share capital of minimum Rs. 5 lakhs is required.
  • Name application should be filed for reservation of name. If all requirements are met a name should be allotted in 3-4 days.
  • A combined form for Company incorporation shall be filed.
  • A registered office should be available with Company and the same should be intimated to the Ministry of Corporate affairs.
  • Certificate for commencement of operation should be obtained before the Company can start functioning

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