Once Company is registered as Public Limited Company, the next step is to follow the compliances prescribed by the Companies Act, 2013. The Public Limited Companies are classified in two that are Listed and Unlisted Public Limited Companies.
What is a Public Limited Company?
A Public Limited Company is explained under Section 2(71) of the Companies Act, 2013. Firstly, a Public Limited Company is a company that offers shares to the general public and has limited liability. Secondly, a Public Limited Company is required to publish its true financial status to its shareholders. It is also provided that a subsidiary company shall also be deemed to be a public company though it continues to function as a private company in its articles.
What is a Listed and Unlisted Company?
• A listed Company is explained in Section 2(52) of the Companies Act, 2013.
• A listed company means a company has its securities listed on any recognized Stock Exchange.
• A listed Companies shares can be traded in the stock exchange.
• A listed Company is recognized as a Public Limited Company because it makes an Initial Public Offering or IPO to sell its shares to the public and to get capital in return.
• An unlisted Company has not been explained in the Companies Act, 2013.
• An unlisted Company can be a Public Limited Company or a Private Limited Company.
• The shares of the unlisted companies are not available for the general public.
• An unlisted Company is not listed in any stock exchange because it does not have any limited number of shares.
• An unlisted Company can have an unlimited number of shareholders for raising capital for any commercial venture.
The term compliance describes the ability to comply with orders, set of rules, or requests.
A public limited company that has been incorporated in India must ensure the compliances concerning the Companies Act, 2013 are adequately met.
Company law provides legal compliance that are required to be followed by every company like reporting of financial results, reporting of changes in management, maintenance of statuary registers, auditing of accounts etc.
We have elaborated below such compliances which a Public limited company has to mandatorily ensure:
Every Company shall paint or affix the name and address of registered office and keep the same painted/affixed, outside every office or place in which its business is carried on, in legible letters.
Every Company shall get its name, address of registered office, CIN, telephone and email printed on all business letters, billheads, letter papers.
Notices and other official publications.
For companies registered in India after November 2019, having a share capital, it is necessary to file a declaration in Form INC 20A for commencement of business within 180 days of incorporating the company before commencing any business or exercising the borrowing powers.
In case the company fails to obtain this certificate, there is a penalty of Rs. 50,000 for the company Rs. 1000 per day for the directors for each day of default.
First Meeting of Board of Directors is required to be held within 30 days of Incorporation of Company. Notice of Board Meeting must be send to every director at least 7 days before the meeting.
Minimum 4 Board Meetings to be held every year with not more than 120 days gap between two meetings.
1. Every unlisted public company shall issue the securities only in dematerialized form and facilitate the dematerialization of all its existing securities (obtain ISIN for each type of security) and follow Section 29 read with Rule 9A of the Companies (Prospectus and Allotment of Securities) Rules, 2014 w.e.f. 02nd October, 2018.
2. Before making any offer for the issue of any securities by the unlisted public company, the entire holding of securities of its promoters, directors, KMP is in Demat form.
3. Every securities holder of an unlisted public company shall get his securities in Demat form before transferring to any person or subscribing to any issue of securities.
4. Submission of reconciliation of share capital audit report in Form PAS-6.
5. Every unlisted public company shall submit Form PAS-6 to the Registrar of companies within 60 days from the conclusion of each half year.
6. For Non-compliance above, as per Section 450, the company and every officer of the company who is in default or such other person shall be punishable with fine which may extend to Rs. ten thousand, and where the contravention is continuing one, with a further fine which may extend to Rs. one thousand for every day after the first during which the contravention continues.
Every Company shall keep and maintain following Registers in the specified format:
Every Company shall keep at its Registered Office, a Register of Directors and Key Managerial Persons (KMP) in the prescribed format containing prescribed particulars.
‐ Minutes of every general meeting, Creditors, Board and Committee shall be prepared and kept within 30 days of conclusion of every meeting concerned.
‐ All appointments in the meeting shall be included in the minutes.
- Minutes of each meeting shall be entered into Minutes Book along with date of such entry.
First Auditor of the company shall be appointed by the BOD within 30 days of Incorporation who shall hold the office till the conclusion of 1st AGM. In case of First Auditor, filing of ADT-1 is optional.
The BOD shall appoint the auditor in first AGM of company who shall hold the office till the conclusion of 6th AGM and shall inform the same to ROC by filing ADT-1. The responsibility to file Form ADT 1 is that of the company and not of the auditor,within 15 days from the date of appointment.
The Directors of company are liable to prepare the Financial Statements of company. The Financial Statements of a small company will contain Balance Sheet, Profit & Loss Statement, Notes to Account thereof and Cash Flow Statement.
Every Company is required to get the Audit of its Financial Statements for Statutory Auditor of company.
Income tax returns need to be filed on or before 30th September following after closing of Financial Year.
Every Company is required to hold an Annual General Meeting on or before 30th September every year during business hours (9 am to 6pm), on a day that is not a public holiday and either at the registered office of the Company or within the city, town or village where the registered office is situated. A 21 clear days’ notice is required to be given for the same.
Every Company is required to file its Financial Statements within 30 days of its Annual General Meeting with Registrar of Company in E-Form AOC-4. The same shall be digitally signed by one director and certified by CA/CS/Cost Accountant in Practice.
Every company is required to file its Annual Return with Registrar of Companies within 60 days of Annual General Meeting in E-Form MGT-7. A company having turnover of INR 50 Cr. or more shall be certified by a Practicing CS in Form MGT-8.
Directors’ Report is to be filed covering all the information required for Small Company under Section 134 within 30 days of AGM along with Form AOC-4. It should be signed by the “Chairperson” authorized by the Board, where he is not so authorized by at least 2 Directors.
All the directors of the company must be filed for the DIN eKYC or DIR-3 eKYC. In DIR-3 eKYC, the Director must provide a unique personal mobile number and a personal email address. There's a penalty of Rs. 5000 in case of failure to file DIN eKYC.
Ans: Any individual, or even a company or an LLP, can become a partner. However, only an individual can become a ‘designated partner’ in an LLP.
Ans: An LLP agreement is made between the partners and the LLP regarding the relationship between the individual partners in the LLP. An LLP agreement usually consists of management policies, the inclusion of new partners, policy-making strategies, and so on.
Ans: Typically, only start-ups that will not be looking for venture capital funding register LLPs. This is because venture capitalists only invest in Public and public limited companies.
Ans: Yes, non-resident Indians and foreign nationals who are willing to enter into an LLP partnership can do so, provided they submit the necessary documents after getting them notarized by the concerned authorities. Although, at least one of the designated partners in an LLP should be an Indian national.