Public Company Formation


According to the section 3(1)(iv) of the Companies Act of 1956, a company is said to be a Public Company if:

  1. It is not a private company
  2. It has a minimum paid-up capital of Rs. 5 Lakhs and above
  3. It is a private company which is a subsidiary of any public company

According to section 43A, a Private company is deemed to be a Public company when:

  1. At least 25% of its paid-up share capital is held by one or more corporate bodies
  2. Its annual turnover has been exceeding Rs. 25 crores since last three consecutive years
  3. It holds at least 25% of the paid-up share capital of any public company
  4. It accepts or renews deposits from the public after making invitation and advertisement.

Also, the minimum number of members in a public company is seven and such a company must have the word "Ltd" as last part of its name.

Steps to set up a Public Limited Company

Entrepreneurs, enterprises, or corporate bodies desirous of forming a new company, should follow the following step by step procedures. The additional steps to be taken along with what are requisite for the formation of the Private Limited Company, for the formation of the Public Limited Company are:

  • Consent of Directors to act as such in Form No.29.
  • Arrange for payment of application and allotment money by Directors on shares taken or agreed to be taken.
  • File the Statement in Lieu of Prospectus with the ROC in schedule-iv of the Companies Act.
  • File a declaration in Form-20 duly signed by one of the Directors.
  • Obtain the Certificate of Commencement of Business.
  1. Selection of the type of the company.
  2. Selection of name for the proposed company.
  3. Applying for Directors Identification Number (DIN) and Digital Signatures.
  4. Drafting of Memorandum and Articles of Association.
  5. Stamping, digitally signing and e-filing of various documents with the concerned Registrar.
  6. Payment of Fees.
  7. Obtaining the Certificate of Incorporation.
  8. Preparation and filing of Prospectus/Statement in lieu of Prospectus and e-Form 19/20 (in case of public companies) for obtaining the certificate of commencement of business.
  9. Obtaining Certificate of Commencement of business (in case of public limited companies).

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