A. What is a public company limited by shares?
In terms of section 3(1)(iv) of the Companies Act, 1956 a public company means a company which is not a private company and has a minimum paid-up capital of five lakh rupees or such higher paid-up capital as may be prescribed. A private company which is subsidiary of a public company is also a public company.
- At least 7 persons are required to form a public company.
- A prospectus or a statement in lieu thereof has to be filed with the Registrar of Companies before allotment of shares.
- It has to obtain Certificate of Commencement of Business from the Registrar of Companies before it can commence business on incorporation.
- It has to hold a statutory meeting of members and file a Statutory Report with the Registrar of Companies.
- Any member of the public who is willing to pay the price may acquire its shares or debentures.
- Its shares are easily transferable and since these can be quoted on a recognised stock exchange, their liquidity is enhanced.
- It can have any number of members and it is easy for it to raise capital through public subscriptttions.
- It can obtain loans from financial instituations and banks.
- It shall have at least three Directors.