Incorporating a public limited company in India is a complex process involving several steps and requirements. However, the process can be more straightforward and smoother with the proper guidance and professional assistance. This post will go through the steps involved in incorporating a public limited company in India, including the pre-incorporation, incorporation, and post-incorporation requirements.
A. Definition of a public limited company
A public limited company, also known as a PLC, is publicly traded with a minimum paid-up capital of Rs. 5 lahks. PLCs have several benefits, including raising capital through public issues, limited liability for shareholders, and a separate legal entity status.
B. Benefits of incorporating a public limited company in India
Incorporating a public limited company in India has many benefits, including:
- The ability to raise capital through public issue
- Limited liability for shareholders
- The separate legal entity status
- Perpetual succession
- Separation of ownership and management
- Wide acceptance and credibility among customers, suppliers, and investors
II. Steps Involved in Incorporation
A. Obtaining Director Identification Numbers (DINs) and Digital Signatures (DSCs) for directors
The first step in incorporating a public limited company in India is to obtain Director Identification Numbers (DINs) and Digital Signatures (DSCs) for all the proposed directors. DINs are unique identification numbers issued by the Ministry of Corporate Affairs (MCA) to individuals who wish to act as company directors. DSCs are digital signatures that file various forms and documents with the MCA.
B. Obtaining a name clearance and reservation for the company
The next step is to obtain a name clearance and reservation for the company. It involves conducting a name search to ensure that the company’s proposed name is not identical or similar to any existing company. Once the name is cleared, it can be reserved for 60 days.
C. Drafting and filing the Memorandum of Association (MOA) and Articles of Association (AOA)
Once the name is reserved, the next step is to draft the company’s Memorandum of Association (MOA) and Articles of Association (AOA). The MOA is a document that sets out the main objects of the company, while the AOA is a document that sets out the regulations for the management of the company. These documents must be filed with the Registrar of Companies (ROC) along with the prescribed fee.
D. Obtaining a Certificate of Incorporation from the Registrar of Companies (ROC)
After filing the MOA and AOA, the ROC will conduct a thorough check of the documents and, if everything is in order, will issue a Certificate of Incorporation. This certificate is the legal proof of the company’s existence and is required for various purposes, such as opening a bank account, obtaining licenses and permits, etc.
E. Obtaining PAN and TAN for the company
Once the certificate of incorporation is obtained, the next step is to get a Permanent Account Number (PAN) and Tax Deduction and Collection Account Number (TAN) for the company. PAN is a 10-digit alphanumeric number issued by the Income Tax Department and is mandatory for all companies. TAN is also a 10-digit alphanumeric number issued by the Income Tax Department and is required for deducting and collecting tax at source.
F. Obtaining licenses and permits as required by the business
Once the PAN and TAN are obtained, the company will need to obtain any necessary licenses and permits required to conduct its business operations. It may include licenses from government bodies such as the Food and Safety Standards Authority of India (FSSAI) for food-related businesses, the Drug Control Department for pharmaceutical companies, and the Pollution Control Board for industries that may impact the environment. It is important to note that these requirements will vary depending on the nature of the business and the location where the company will be operating.
III. Post-Incorporation Requirements
A. Holding the first meeting of the Board of Directors
Once the company is incorporated, the first meeting of the Board of Directors must be held within 30 days of the date of incorporation. This meeting is essential as the Directors will elect a Chairman, appoint an auditor, and adopt the company’s financial year.
B. Appointing an auditor and filing the first annual returns
An auditor must be appointed within 30 days of the company’s incorporation and are responsible for auditing the company’s financial statements and ensuring compliance with accounting standards and laws. The company must file its first annual returns with the ROC within 180 days of the incorporation of the company.
C. Opening a bank account for the company
Once the company is incorporated, it must open a bank account. It will be used for transactions such as receiving and making payments to suppliers, employees, and other stakeholders.
D. Filing returns and compliance with various laws and regulations
The company must file other returns such as Income Tax, GST, and other returns as required by the laws and regulations. The company also needs to comply with applicable laws such as the Companies Act, Income Tax Act, and GST Act, as well as other applicable laws and regulations.
Incorporating a public limited company in India is a complex process involving several steps and requirements. However, the process can be more straightforward and smoother with the proper guidance and professional assistance. It is important to note that the incorporation process is just the beginning, and ongoing compliance and adherence to laws and regulations are essential for the success and growth of the company. Therefore, seeking professional assistance during the incorporation process and for ongoing compliance requirements is recommended.