A Public Limited Company (PLC) is a company incorporated under the Companies Act, 2013 that is permitted to raise capital from the general public by issuing shares, debentures or deposits. Defined in Section 2(71), it is the structure of choice for large businesses that intend to list on a recognised stock exchange such as the NSE or BSE. In return for access to public money, a PLC carries a heavier governance and disclosure burden than a private company.
What defines a public limited company
Under Section 3(1)(a), a public company must be formed by at least 7 members, with no upper limit on membership. Its shares are freely transferable and its name must end with the word "Limited". Incorporation is done online through the MCA's SPICe+ form. Before it can begin operations or exercise borrowing powers, the company must file a declaration of commencement of business in Form INC-20A (Section 10A) within 180 days of incorporation.
Directors, members and capital
- Directors: minimum 3, maximum 15 under Section 149; the ceiling can be raised by a special resolution. At least one director must have stayed in India for 182 days or more in the previous financial year.
- Independent and woman directors: listed PLCs must have at least one-third of the board as independent directors, and prescribed classes of company must appoint a woman director.
- Capital: the earlier ₹5 lakh minimum paid-up capital requirement was removed by the Companies (Amendment) Act, 2015, so there is no statutory minimum, though a realistic capital base is needed to be credible with investors and bankers.
PLC vs private limited company
The two structures differ mainly in their access to public funds and the compliance that comes with it:
| Feature | Public Limited | Private Limited |
|---|---|---|
| Minimum members | 7 | 2 |
| Maximum members | Unlimited | 200 |
| Minimum directors | 3 | 2 |
| Share transfer | Freely transferable | Restricted by articles |
| Invite public to subscribe | Allowed | Prohibited |
| Stock exchange listing | Eligible | Not eligible |
Ongoing compliance
- Hold at least 4 board meetings a year, with no more than 120 days between two consecutive meetings (Section 173).
- Hold an Annual General Meeting every year (Section 96) and file the annual return and financial statements with the ROC.
- Quorum for a general meeting (Section 103) is 5 members present in person where membership is up to 1,000, rising to 15 and then 30 members for larger companies.
- Meet statutory audit, secretarial audit and, where thresholds apply, cost audit and CSR obligations.
On tax, a domestic PLC pays 25% where turnover is up to ₹400 crore and 30% otherwise, or it may opt for the concessional 22% rate under Section 115BAA (about 25.17% effective after surcharge and cess).
Going public and listing
To raise money from the public, a PLC must issue a prospectus under Section 26 and comply with SEBI's ICDR Regulations. Once listed, it has to maintain a minimum public shareholding of 25% (to be reached within three years of listing) and follow the SEBI LODR disclosure norms. A common mistake is treating the PLC as a mere status upgrade; the added cost of audits, disclosures and board governance only pays off if you genuinely intend to raise public capital or list on an exchange.