Similar to a private limited company, a Public Limited Company is most
suitable to run a medium to large business, which requires substantial capital
and resources. A public limited company has limited liability and can offer
shares to the public at large. Although there is requirement of a minimum of 3
directors and 7 members to incorporate a public limited company, there is no
restriction on the maximum number of directors and members. A shareholder of a
public limited company isn’t personally responsible for any loss or debts of
the company for any amount greater than the share capital subscribed by him. However,
this characteristic of a public limited company does not offer immunity to the
shareholders for their own illegal actions.
Registering for a public limited company means
the company becomes subject to stringent regulatory compliance, public scrutiny
and transparency. This makes the company attractive to public at large and is ideal
for anyone who is looking to raise capital from external sources. Bankers and
other Lenders are more inclined to lend money to a public limited company than
to a Proprietorship / Partnership / LLP. A public limited company has all the advantages
of partnership namely flexibility, greater capital, combination of different
and diversified abilities, etc., and at the same time it has advantages of
limited liability, greatest stability and separate legal entity. A summary of advantage and disadvantage of proprietorship business model are as follows:-
| Proprietorship
Concern | Partnership Firm | Limited Liability
Partnership (LLPs) | One Person Company
(OPC) | Private Limited
Company | Public Limited
Company | |
| Registration
Requirement | Not required | Not mandatory | Registration must | Registration must | Registration must | Registration must |
| Registering Authority | No Registration Required | Registrar of Partnership | Registrar of Companies | Registrar of Companies | Registrar of Companies | Registrar of Companies |
| Suitable for | Small businesses in unorganised sectors | Small businesses in unorganised sectors | Small to Medium businesses in organised sectors | Small businesses in organised sectors | Start up, Growing and Medium size businesses in organised sectors | Medium to large businesses in organised sectors |
| Name Availability | Anything. However should not breach trademark or copyright | Anything. However should not breach trademark or copyright | Anything with prior approval. However should not breach trademark or
copyright | Anything with prior approval. However should not breach trademark or
copyright | Anything with prior approval. However should not breach trademark or
copyright | Anything with prior approval. However should not breach trademark or
copyright |
| Time required for
Setting-up and start of business | Instantly | Instantly | Instantly after setting-up, however incorporation may take 7-10 days | Instantly after incorporation however incorporation may take 7-10 days | Instantly after incorporation however incorporation may take 7-10 days | Instantly after incorporation however business can be started only after
securing Certificate of Commencement of Business after incorporation, which
put together may take 15-21 days |
| Investment
flexibility | Limited | Limited | Limited | Limited | Unlimited | Unlimited |
| FDI Permission | Restricted | Restricted | Flexible | Restricted | Flexible | Flexible |
| Legal Recognition | Not a separate legal entity | Semi-Separate legal entity | Separate Legal Entity | Separate Legal Entity | Separate Legal Entity | Separate Legal Entity |
| Liability Protection | Not Available | Not Available | Limited | Limited | Limited | Limited |
| Existence /
Continuity | Limited | Subjective | ||||
| Min./Max. Members /
Owners / Shareholders | Minimum: 1 | Minimum: 2 | Minimum: 2 | Minimum: 1 | Minimum: 2 | Minimum: 7 |
| Minimum Paid-up
Capital | Nil | Nil | Nil | Nil | ₹ 1 Lakh | ₹ 5 Lakh |
| Income Tax | At Slab Rates | At 30%+SC+Cess | At 30%+SC+Cess | At Slab Rates | At 30%+SC+Cess | At 30%+SC+Cess |
| Profit Distribution
after Tax | Exempt | Exempt | Exempt | Exempt | Taxable | Taxable |
| Statutory Compliances | Minimum | Moderate | Moderate | Moderate | High | High |
| Main applicable laws (This is indicative
list of laws, there could be other laws applicable to a peculiar business
activity / entity) | Income Tax Act Goods & Service Tax Value Added Tax (limited) Excise and Customs Act* (for manufacturing and / or importers /exporters) | Income Tax Act Goods & Service Tax Value Added Tax (limited) Excise and Customs Act* (for manufacturing and / or importers /exporters) | Income Tax Act Goods & Service Tax Value Added Tax (limited) Excise and Customs Act* (for manufacturing and / or importers /exporters) | Income Tax Act Goods & Service Tax Value Added Tax (limited) Excise and Customs Act* (for manufacturing and / or importers /exporters) | Income Tax Act Goods & Service Tax Value Added Tax (limited) Excise and Customs Act* (for manufacturing and / or importers /exporters) | Income Tax Act Goods & Service Tax Value Added Tax (limited) Excise and Customs Act* (for manufacturing and / or importers /exporters) |
| Licensing
Requirements (This is an indicative list of licenses. Some
other licenses may also be required depending on underlying business activity /
entity) | -Trade License - Import/Export License - Excise & Customs License - Food & Beverages License | -Trade License - Import/Export License - Excise & Customs License - Food & Beverages License | -Trade License - Import/Export License - Excise & Customs License - Food & Beverages License | -Trade License - Import/Export License - Excise & Customs License - Food & Beverages License | -Trade License - Import/Export License - Excise & Customs License - Food & Beverages License | -Trade License - Import/Export License - Excise & Customs License - Food & Beverages License |
| Periodical
Compliances | Tax & Other Return | Tax & Other Returns | Tax & Other Returns | Tax & Other Returns | Tax & Other Returns | Tax & Other Returns |
| Liquidation /
Dissolution | Easy | Easy | Some legal formalities | Some legal formalities | Moderate legal formalities | Moderate legal formalities |