INCORPORATION OF PUBLIC LIMITED COMPANY

BACKGROUND OF STUDY:

Johnson is a well-known businessman in Mumbai who is looking to develop his small-scale business by starting a public limited company. Therefore, a public company is wherein a business whose shares can be freely traded on a stock exchange or over-the-counter. The stocks of this type of company belong to members of the general public, as well as pension funds, and other large investing organizations.

Draft the following issues on the above facts: –

1) What are the stages for basic incorporation of the company?

2) How does Johnson register his company officially under MCA?

3) Describe the statutory definition of a public company under the Companies Act, 2013?

4) What are the pre-requisites conditions needed for the incorporation of a public company?

5) Help Johnson in the successful formation of his public limited company by setting out all the step-by-step procedures.

RESPONSE TO ABOVE MENTIONED ISSUES:

WHAT ARE THE STAGES FOR BASIC INCORPORATION OF THE COMPANY?

In order to incorporate a company, one needs to consider the following points:

  1. Appropriate selection of type of proposed company as Public limited company (PLC), Private Company (Company limited by guarantee, Unlimited company, limited by shares), One Person company, Section 8 company (a Nonprofit making organization), Nidhi Company, producer Company.
  2. Selecting the primary business objective of theproposed company.
  3. Deciding other factors such as the name, number of shares, registered officeof the proposed company.
  4. Preparation of DSC.
  5. Applying for DIN of the proposed directors.
  6. Preparation of documents such as DIR-2, NOC etc.
  7. Collecting relevant information from directors and subscribers (PAN no., date of birth, educational qualification, Mobile No., Email ID, Copy of Aadhar, Copy of PAN card etc.)
  8. Filing the forms along with requisite documents officially with the ministry along with payment of statutory fees as required for such purpose. After which Certificate of Incorporation shall be provided in name of the company after thorough scrutiny of the submitted documents by the concerned official.
HOW DOES JOHNSON REGISTER HIS COMPANY OFFICIALLY UNDER MCA?

In order to register the company officially with MCA Mr. Johnson needs to take note of the following:

  1. Check name availability of the proposed name.
  2. Collect the necessary data and documents to be attached with the incorporation form.
  3. Prepare DSC of all the directors and subscribers.
  4. The name shall be reserved for 20 days from date of approval.
  5. After which PART B of form SPICE+ can be filled in furtherance of incorporation process and requisite documents needs to be attached along within specified columns.
  6. Afterwards form AGILE PR, e-MOA, e-AOA also needs to be filled accordingly.
  7. Then forms need to be downloaded and DSC is required to be affixed appropriately in the provided columns of the downloaded forms.
  8. Upload the forms and pay the statutory fees.
DESCRIBE THE STATUTORY DEFINITION OF A PUBLIC COMPANY UNDER THE COMPANIES ACT, 2013?
  • In accordance to Companies Act 2013, Section 2(71) describes a Public Company as[1]:

A company which is not a private company and have minimum paid-up share capital as may be prescribed.

Provided that a company which is a subsidiary of a company, not being a private company, shall be deemed to be public company for the purposes of this Act even where such subsidiary company continues to be a private company in its articles.

  • The above-mentionedstatutory definition provides us with following elements of a Public Company:
  1. A company which is incorporated as a Public Company, having minimum paid up share capital as prescribed.
  2. A company which is incorporated as a Private Company but which is a subsidiary of a Public Company, will be deemed as a Public company, irrespective of the status of such private company mentioned in its Articles.
WHAT ARE THE PRE-REQUISITE CONDITIONS NEEDED FOR THE INCORPORATION OF A PUBLIC COMPANY?
  1. Needs MCA login ID.
  2. Name availability – Name should reflect the primary objects of the company and must not be undesirable as per Rule 8 of the Companies (Incorporation) Rules, 2014[2]
  3. Draft Objects of the company
  4. Registered office address
  5. Details of subscribers- Minimum 7 as per the Companies Act 2013[3]
  6. Number of directors- Minimum 3 as per the Companies Act 2013[4]

Documents to be prepared/collected for incorporating a public limited company:

  1. Proof of identity and address of all the directors
  2. Proof of identity and address of all the subscribers
  3. PAN number of all the directors
  4. Utility Bill of the registered office address of the proposed company (not older than 2 Months)
  5. NOC (No Objection Certificate) from the landlord where the office of the company will be situated
  6. Director Identification Number (DIN) of all the directors (if already obtained)
  7. Digital Signature Certificate (DSC) of the subscribers/directors
  8. Email ID of all the directors
  9. Mobile number of all the directors
  10. Photo of the directors
  11. PAN number of all the directors
HELP JOHNSON IN THE SUCCESSFUL FORMATION OF HIS PUBLIC LIMITED COMPANY BY SETTING OUT ALL THE STEP-BY-STEP PROCEDURES.

The steps required to be followed in order to register the Public company are stated below:

Step 1Acquire DSC for subscribersTo be affixed on the forms that will be filed for purpose of incorporation of the company.   Documents required: Self-attested copy of PAN (as ID proof) and Aadhar (as Address proof)Photo of the ApplicantValid E-mail ID and Phone number of the respective applicant
Step 2Check proposedname availabilityThe name must be checked through MCA Services-Check Company.The proposed name must also be verified in respect to the trademark, the link for which is also available on MCA Services-Check Company. The proposed name must not contain word as specified in Section 4(2) and (3) of the Companies Act, 2013 read the Rule 8 of the Companies (Incorporation) Rules, 2014.
Step 3Prepare draft MOAMemorandum of Association (MoA) is one of the most important documents for a company as it specifies the operational activities that the company will carry. The company can only carry those activities that are specified in MOA.   Thus, a draft of MOA needs to be prepared in accordance with the primary activities of the company that will be filled in web form for incorporation.   We don’t need to prepare draft of Article of Association (AoA) as AOA is already drafted in web form with option to make modifications in the same.
Step 4Apply for name reservation in PART A SPICE+.The proposed name after confirming its availability can be reserved through PART A of web-based form SPICe+. Only 2 names can be applied at a time in the formNeed to attach NOC of existing trademark owner (if required)   The following details need to be filed in the form for name reservation: Type of companyClass of companyCategory of company Sub-Category of companyDivision of activitySummary of objectsProposed name (Only 2 are allowed)   Need to Auto check the form in order to save and continue towards PART B of the form.   NOTE: (In case name reservation is applied separately in PART A, PART B is not filed immediately with PART A than Rs. 1000/- shall be paid as statutory fees for name reservation. Therefore, more preferablyit is better to fileboth PART A and PART B at the same time after checking the name availability properly in order to save cost of Rs. 1000.)
Step 5  Proceed to file PART B of web form SPICE+.Through PART B of form SPICE+ we can apply for various services at once which includes: Incorporation Application for DIN of directorsApplication for PAN and TANMandatory registration for EPFO and ESIC (mandatory)GST registration (optional)   The details that are required to be mentioned in PART B of form SPICE+ includes:   About share capital of proposed companyDetails of Capital StructureAddress of the proposed companyEmail ID of the proposed companyNumber of subscribers and directorsDetails of subscribers and directorsParticulars of Stamp DutyInformation for PAN and TAN     Documents that are required to be attached after filing all the details in the form are: Subscribers ID proof and residential proofDirectors ID proof and residential proofUtility Bill (not older than 2 months)NOC for registered office of the company from owner of the propertyAddress proof of registered office of the company (can attach Lease Deed, Rent Agreement etc.)Director consent in Form DIR-2MOA and AOA (no need to attach anything, as need to file e-AOA and e-MOA)   Last step in this part is to enter details of professional, after which click on pre scrutiny. Once pre scrutiny is successful the form needs to be submitted by clicking on Submit option.   NOTE: All documents must legible.  
Step 6Proceed to file AGILE PRO of web form SPICE+.Thenext step needs to be followed after successfully entering all the details in PART-A and PART-B of SPICE+ is filing the details of AGILE PRO, which is for the following services: Application for obtaining GST number (optional)Opening of Bank Account (mandatory)EPFO and ESIC (mandatory)   The following details need to be mentioned in AGILE PRO: Whether GST registration is required or not (need to select Yes or No)Primary business activity of the companyExact nature of businessAdd Director details for DIN application along with Photograph, PAN number, Email ID, Contact number, residential address etc. After that need to verify the Mobile number and Email ID through an OTP verification method.Employers particulars for EPFO and ESIC mandatory.Particulars of bank   The documents required to be uploaded in this part are for opening of Bank account which includes: ID proof of authorized signatorySpecimen signature of authorized signatoryAddress proof of authorized signatory     After that click on pre scrutiny, if there are no errors pre scrutiny will be successful.
Step 7Proceed to file e-MOA and e-AOAFor AOA:Click on the option if entrenched is requiredAdd details of subscribersAdd details of professionals who is signing the formClick on Check formClick on Save and Submit   For MOA:Enter objects of the companyAdd details of share capitalAdd details of subscribersAdd details of professionals who is signing the formClick on Check formClick on Save and Submit
Step 8Download formsAfter filing all the forms, the option to download the forms will be available which allows us to download the forms.After downloading all the forms affix DSC of all the subscribers and professional in the respective columns and save them.
Step 9UploadAfter affixing DSC, need to upload the forms through E-filing option. There are 5 forms that are required to be uploaded as linked forms in the below mentioned series. eMOAeAOA AGILE-PRO INC-9
Step 10PaymentThe final step after successfully uploading all the forms in specified order is making the statutory payment.
Step 11  Check the registered Email for COI, PAN, TAN, GSTIN (if applied), Establishment Code & Employer code of the organizationAfter forms are uploaded and payment is made. The forms are reviewed and if no objections are raised by the Ministry the company will be issue Certificate of Incorporation (CIN),PAN and TAN, GSTIN (if applied for), Foundation code under the EPFO and Employer Code under Employees State Insurance Corporation.    

[1]Section 2(71). Companies Act 2013.

[2] Rule 8. Chapter II The Companies (Incorporation) Rules, 2014

[3] Section 3(1)(a). Companies Act 2013.

[4] Section 149(1). Companies Act 2013.

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