A Public Limited Company is a Company limited by shares in which there is no restriction on the maximum number of shareholders, transfer of shares and acceptance of public deposits. The liability of each shareholder is limited to the extent of the unpaid amount of the shares face value and the premium thereon in respect of the shares held by him. The minimum number of shareholders is 7.

The choice of entity depends on circumstance of each case. Private Limited Company has lesser number of compliance requirements. Therefore, generally where there is no requirement of raising of finances through a public issue and the ownership is intended to be closely held by limited number of persons, Private Limited Company is the best choice.

The minimum paid up capital at the time of incorporation of a private limited company has to be Indian Rupees 1,00,000. There is no upper limit on having the authorized capital and the paid up capital. It can be increased any time, by payment of additional stamp duty and registration fee.

The authorized capital is the capital limit authorized by the Registrar of Companies up to which the shares can be issued to the members / public, as the case may be. The paid up share capital is the paid portion of the capital subscribed by the shareholders.

On receipt of the name approval intimation from the ROC the MOA and the AOA are required to be drafted. The MOA states the main, ancillary / subsidiary and other objects of the proposed company. The AOA contains the rules and procedures for the routine conduct of the proposed company. It also states the authorized share capital of the proposed company and the names of its first / permanent directors. After that MOA and AOA are required to be stamped.

A stamp duty is required to be paid on MOA and AOA. The stamp duty depends on the authorized share capital.

The following documents are required to be executed before they are submitted to the ROC:

• MOA and AOA – These are required to be signed by the promoters in their own handwriting in presence of a witness stating their full name, father’s name, residential address, occupation and number of shares subscribed for, etc.
• Form No. 1 – This is a declaration to be executed on a non-judicial stamp paper by one of the directors of the proposed company or other specified persons such as Attorneys or Chartered Accountant stating that all the requirements of the incorporation have been complied with.
• Form No. 18 – This is a form to be filed by one of the directors of the company informing the ROC the registered office of the proposed company.
  
• Form No. 29 – This is a consent obtained from all the proposed directors of the proposed company to act as directors of the proposed company. (Not required in case of private company).
• Form No. 32 – This is a form stating the fact of appointment of the proposed directors on the board of directors from the date of incorporation of the proposed company and is signed by one of the proposed directors.
• Power of Attorney signed by all the subscribers of MOA authorizing one of the subscribers or any other person to act on their behalf for the purpose of incorporation and accepting the certificate of incorporation.
• Filing fees as may be applicable.

After the documents are filed, the ROC calls the attorney for scrutiny and making the corrections in the MOA and AOA filed. On complying with the same, the certificate of incorporation is issued.

On receipt of the certificate of incorporation, the public company has to complete certain other legal formalities such as a statutory meeting (within 6 months), statutory report, etc. On completion of the said formalities and on filing of the statutory report with the ROC the ROC issues the certificate of commencement of business to the company. Thereafter, the Public Company can start the business operations. The Private Company can start its business immediately on incorporation.