Advantages of public limited liability company?
Question: Advantages of public limited liability company?
How to Start a Public Limited Company
A public limited company (PLC) is a type of business entity that can offer its shares to the general public and has limited liability. PLCs are regulated by the Companies Act, 2013 and have to comply with various rules and requirements. In this blog post, we will discuss the advantages of forming a PLC, the steps involved in registering a PLC, and some tips for running a successful PLC.
Advantages of a PLC
One of the main advantages of a PLC is that it can raise capital from a large number of investors by issuing shares on a stock market. This can help the PLC to expand its business, invest in new projects, and diversify its risk. A PLC can also attract more attention from potential customers, partners, and media, as it has to disclose its financial performance and other information to the public.
Another advantage of a PLC is that it has limited liability, which means that the shareholders are not personally responsible for the debts or losses of the company. They can only lose the amount they have invested in the shares. This can protect the personal assets of the shareholders and encourage them to invest in the company.
A third advantage of a PLC is that it has more flexibility and liquidity in transferring its shares. The shareholders can easily buy or sell their shares on the stock market without any restrictions or paperwork. This can help them to exit or enter the company as per their convenience and preference.
Steps to Register a PLC
To register a PLC in India, you need to follow these steps:
1. Obtain a Digital Signature Certificate (DSC) and Director Identification Number (DIN) for each of the directors of the company. You need at least three directors for a PLC.
2. Apply for the name approval of the company on the MCA portal. You need to provide at least four names in order of preference and ensure that they are unique and not similar to any existing company or trademark.
3. Prepare and file the Memorandum of Association (MOA) and Articles of Association (AOA) of the company along with other documents such as identity proof, address proof, consent letters, declaration forms, etc. on the MCA portal. The MOA and AOA are the charter documents that define the objectives, rules, and regulations of the company.
4. Pay the prescribed fees and stamp duty on the MCA portal and obtain the Certificate of Incorporation (COI) from the Registrar of Companies (ROC). The COI is the legal proof of existence of the company.
5. Apply for a Permanent Account Number (PAN) and Tax Deduction and Collection Account Number (TAN) for the company from the Income Tax Department.
6. Open a bank account for the company and deposit the minimum paid-up capital as required by law. The minimum paid-up capital for a PLC is Rs 5 lakh or such higher amount as prescribed by law.
7. Obtain any other licenses or registrations as applicable for your business activity, such as GST registration, FSSAI license, MSME registration, etc.
Tips for Running a Successful PLC
Once you have registered your PLC, you need to follow some best practices to run it smoothly and efficiently. Here are some tips for running a successful PLC:
- Maintain proper books of accounts and records as per the accounting standards and legal requirements.
- Conduct regular board meetings and general meetings as per the Companies Act, 2013 and keep minutes of the proceedings.
- File annual returns and financial statements with the ROC within the due dates and pay any applicable fees or penalties.
- Comply with all tax laws and regulations and file timely returns and payments with the tax authorities.
- Follow corporate governance norms and ethical standards and ensure transparency and accountability in your business operations.
- Communicate effectively with your shareholders, customers, employees, suppliers, regulators, and other stakeholders and address their queries and grievances promptly.
- Monitor your business performance and financial health regularly and take corrective actions if needed.
- Seek professional advice from experts such as lawyers, accountants, auditors, consultants, etc. whenever required.
Conclusion
A public limited company is a popular choice for entrepreneurs who want to raise capital from a large pool of investors and enjoy limited liability protection. However, forming and running a PLC also involves various challenges and responsibilities that require careful planning and execution. If you are interested in starting a PLC, you should consult a professional service provider who can guide you through the process and help you comply with all legal formalities.
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