Registration of Public Ltd. Company in India – A Procedure
Introduction to Public Companies:
Public Company, as the name suggests has the ownership of public i.e. shareholders. A Public Company does not have an inclusive or clear definition in the Companies Act. But the company that satisfies the following conditions is a public company:
* The Company which is not a private company is a public company.
* The Company must have a minimum paid – up capital of Five Lacs Rupees for being a public company.
* A private company which is a subsidiary of a company that is not a private company.
» The first condition states that the restrictions of private company will not be applicable to the public company. This can be well explained by the points given below:
o There is no restriction on sale or transfer of shares in public company as compared to that of a private company.
o A public company can issue its shares for subscription in public by an open invitation in public while it is not allowed in a private company.
o There is no restriction on number of members that can join the Public Company but for a public company number of members is restricted to 200.
» The second condition is very simple, as the amount of minimum paid – up capital is specifically given in the provision which states the amount as Rs. 5 Lacs which is Rs. 1 Lakh for a Private Company.
» The third condition states that the company which is a subsidiary of a company which is not a private company that means the subsidiary of a public company is also a public company even if it is a private company by its constitution.
Registration of Public Companies in India:
Procedure for registration of Public Companies consists of few steps ahead as that of registration of private companies. Let us see the similar steps of procedure for registration of public and private companies in brief and then we will have a look at the further process required for Registration of Public Companies.
Initial steps of registration process (Which are similar to that of registration process of a private company):
» As a first and foremost step, the promoters have to apply for and obtain the Directors Identification Number (DIN) for the persons who are going to apply for company’s registration.
» The promoters have to apply for a Digital Signature Certificate (DSC) from the Service provider. It will be used to sign the documents of company that are to be filed online.
» Digital Signatures obtained by promoters are to be registered with Ministry of Corporate Affairs on the site of www.mca.gov.in which is required for role check.
» The Further step is to apply for name approval. Promoters have to file Form No. 1A which consists of suggesting 6 names in the priority basis, that are not identical with other companies along with fees of Rs.500.
» After receiving the approval of name, file the 3 application forms initially required for registration of companies. The forms are:
§ Form 1 – Application or declaration for incorporation of a Company
§ Form 18 – Notice of Situation or change of Situation of registered office
§ Form 32 – Particulars of Appointment of Managing Director, Directors, manager and …
» Pay the fees for registration. The amount of which is based on the amount of authorized share capital of the company.
» Constitution of the company i.e. Memorandum of Association (MOA) and the guide of internal rules and regulations i.e. Articles of Association (AOA) are to be prepared.
» The following documents are to be filed with Registrar of Companies (ROC):
§ Documents in supporting of Fees paid to Registrar of Companies (ROC)
§ Document being an original letter received from Registrar of Companies, communicating the allotment or approval of name.
A stamped copy and a spare copy of both Memorandum of Association (MOA) and Articles of Association of the Company (AOA) are to be filed with the ROC.
§ Copy of agreement of company with any person proposed to be a whole time director or manager.
§ A power of attorney given to a person for acting as an authorized signatory is to be submitted which is to be provided in the non – judicial stamp paper, purchased in the name of person who is a signing authority.
§ No objection letters from promoters / directors who are shown as promoters in Form No. 1A but who will not be associated with the company afterwards are to be filed with the Registrar of Companies.
» After all the documents are submitted, Registrar of Companies on his satisfaction will issue the Certificate of Incorporation.
After the Certificate of Incorporation is received, the company has to raise the capital for running the company’s business. Capital can be raised by inviting the public to subscribe for shares. Prospectus is to be prepared and is used as an invitation for public. The prospectus contains all the details of companies as to how and where the funds of the shareholders will be utilized. The company may also opt for raising capital only from directors.
Obtaining Certificate of Commencement of Business:
In addition to receiving the Certificate of Incorporation, Public Company has to obtain Certificate of Commencement to start the company’s business after raising capital. The steps involved in obtaining Certificate of Commencement of Business are as follows:
» File Form No. 20 – Declaration of compliance with the provisions of section 149(2)(b) of the Companies Act,1956, in case where a company has not issued the capital in public. It means that Prospectus inviting public to subscribe the company’s shares is not prepared so; Statement in Lieu of Prospectus is to be attached with Form No. 20. The compliance of Section 149 (2)(b) states that:
o In case where the public issue is not made and the shares are to be taken by the directors, all the directors must pay the amount payable in cash for which they are liable to pay for such shares to be taken by them.
» File Form No.19 – Declaration of compliance with the provisions of section 149(i)(a), (b) and (c) of the Companies Act,195, in case where the company has invited the public for subscribing the issue. The prospectus prepared by company for inviting public to subscribe such issue is to be attached with the form. The conditions to be fulfilled as per Section 149(i)(a), (b) and (c) are:
o Minimum Subscription of shares is to be achieved.
o All the directors must have paid for shares allotted to them.
o All payments on shar
e allotment are received.
o All the money should be repaid which are received on share application and to whom allotment is not made.
» The fees of the above form are to be paid along with filing the form and it is to be calculated on the basis of Paid – up capital. This calculation can be made on the MCA21 portal.
» In case where the conditions of the above section i.e. 149 (2)(b) or 149(i)(a), (b) and (c) whichever is applicable are satisfied and the Registrar of Companies is satisfied with the fact then he will issue the Certificate of Commencement of Business. The company starts its business on receiving such “Certificate of Incorporation”.