Overview of Public Limited Company registration in Chandigarh
Starting a business of your own may be a huge accomplishment for you to finally gather courage & take a leap of faith in the right direction regardless of its scale of operations. But, you would want to ensure that you choose a business structure that could offer maximum benefits for you and you might want to look for options to choose from. Accordingly, if a business entity will need huge capital investments, may opt to be registered as a Public Limited Company in Chandigarh.
But, what is a Public Company? As per Section 2(71) of the Companies Act, 2013 a Public Company means a company that is not a private company. Further, a private company that is a subsidiary of a Public Company shall be deemed a Public Company.
In other words, a Public Limited Company is a company that doesn’t meet the definition of a private company i.e. it has at least seven members and at least three directors on its board and there is no upper ceiling for the maximum number of members as in the case of a private company.
Incorporation of a Public Limited Company with the Ministry of Corporate Affairs online portal grants legal recognition as well as affords all other privileges that are allowed to a body corporate such as limited liability, perpetual succession & a separate legal status. Not only this, a Public Limited Company is permitted by the law to raise capital from the public in general by listing their shares in a public stock exchange in India as well as from abroad.
However, since there is a larger amount of public interest involved in a Public Limited Company, it is often subject to more stringent compliances with many of the restrictive provisions of the Companies Act.
Public Limited Company in Chandigarh
Chandigarh is a union territory in India and is the capital of its neighbouring states, Punjab and Haryana. Chandigarh is among the early planned cities and is internationally famous for its architecture and urban designs. Mohali and Panchkula are the Metropolitan areas of Chandigarh. According to the 2011 Indian census, the total population of Chandigarh is 1,055,450, and the City’s population density is about 9,252 persons per square kilometer. Chandigarh has a sex ratio of 818 females for every thousand males. While English is the state’s sole official language, Hindi and Punjabi are the other two most spoken languages in Chandigarh.
Chandigarh was declared the third-largest deposit center and seventh-largest credit center nationwide by the Reserve Bank of India in 2012; that’s why it is counted among the wealthiest towns in India. Chandigarh has three government bases – Chandigarh administration, Punjab government, and Haryana government. The city has three government bases, and that’s why the government is a significant employer in the City. Even the people residing in Chandigarh are mainly those who were working for these governments or are the retired government officials or Army officials. Because of this reason, the Chandigarh is also known as ‘Pensioner’s Paradise.’
The prominent industries in Chandigarh are paper manufacturing, metal, alloy, pharmaceuticals, food products, sanitaryware, etc. Trade and businessis the main occupation in Chandigarh. Many prominent Indian firms and multinational corporations, including EVRY, Dell, Tech Mahindra, Airtel, etc., have established their bases in the City and its suburbs.
The startup ecosystem in Chandigarh
Before discussing the startup ecosystem of Chandigarh, you must know what a startup is. In simple words, a startup is a business still in its initial growth stage. Chandigarh is a Union Territory, and it is also the capital of Punjab and Haryana. Economically, Chandigarh is the highest-income town and the most well-planned and cleaner City in India. If roughly estimated, Chandigarh has 2500 plus small-scale businesses, which means that the startup ecosystem of Chandigarh is quite supportive.
This startup policy of Chandigarh was officially released by the government of Chandigarh in 2017 with a vision to create a world-class startup ecosystem in the City. As already cleared by the Chandigarh government that it wants to make a world-class startup ecosystem, the union territory has mainly focused on Information Technology. It would be fostered through strategic investments and policy interventions.
To build a strong startup ecosystem, the government is leveraging the entrepreneurial spirit in the City to attract young people to become an entrepreneur. The nodal agency responsible for developing the startup ecosystem is the ‘Industries Department of the Chandigarh government.’ Under the startup policy of the Chandigarh government, more than 80 startups are registered.
The aim of the startup policy of the Chandigarh government is to focus on –
• the development of Information Technology (IT) startups
• develop entrepreneurship through entrepreneurship development programs
• development of 50,000 square feet of incubation space
• provide hand-holding support to students and young entrepreneurs to launch their startups without any chaos.
The startup policy of the Chandigarh government has successfully shown impeccable performance in awareness and outreach.
Profit-making startup ideas in Chandigarh
Recycling Business
Chandigarh is among the clean cities in India, and that’s why the recycling business in Chandigarh is both economically and physically advantageous. Chandigarh’s recycling business provides many investment opportunities that involve construction, waste recycling devices, recycling cell phones, composting laptops, reusing, and other digital item recycling. If you are a nature lover and have decent money, you can invest in the recycling business as it will yield high profits.
Food processing Business
The majority of cereals generated are not consumed in their raw form by the customers, so through food processing, the gross material is converted into simple to prepare food. The food processing business has a wide scope in Chandigarh. Chandigarh produces bushels of grain, rice, and corn each year which means that they need to process the cereals for customers’ consumption. Food processing units need simple investment and can help you earn long-term profits.
Livestock Farming
Chandigarh is incomplete without milk, creamy lassi, and butter so livestock farming in Chandigarh is also a good idea. Livestock farming consists of a significant proportion of Chandigarh’s economic development. Chandigarh government is very determined to promote livestock farming. The government provides appropriate livestock medical care facilities and the ability to augment livestock numbers by establishing a semen bank.
Restaurants
The cuisines of Chandigarh are very creamy and spicy as they consist of lassi, chole bhature, parantha, and Amritsari kulcha. Chandigarh has a very delicious cuisine that attracts tourists. So, opening a restaurant in Chandigarh is an excellent idea. The traditional Punjabi food is loved by tourists and can help you in making profits. To open a restaurant in Chandigarh, you need a reasonable investment. Besides this, you need to have enough money to run the restaurant for at least six months without any profits. Though the profit earning will be late, this will surely provide you with a long-term and stable business.
Information Technology
The network connectivity of Chandigarh and its connectivity with states like Haryana, Punjab, Delhi, and Himachal Pradesh attract the IT pool of talent and IT companies. Many prominent IT companies are looking to establish their base and offices in Chandigarh. Chandigarh and its suburbs are a significant home to Indian and international companies. So, starting an information technology business is a perfect idea because you can start a small company in information technology with a reasonable amount of investment.
Salient Features of a Public Limited Company registered in Chandigarh
Number of Directors
Unlike a One Person Company or a private limited company, the primary requisite for starting a public limited company which will need at least three directors with no upper ceiling for the maximum number of directors.
Body Corporate
Since a Public Limited Company is a body corporate it enjoys limited liability, perpetual succession, and a separate legal status apart from its members in the eyes of law. Accordingly, in the event of debts or losses, the liability of any member could not go beyond his agreed contribution which is unlike in the case of a partnership firm or a sole proprietorship firm where the partners and business owners are jointly and severally liable for the debts of the business.
Paid up Capital
To start a Public Limited Company, there must be a minimum paid-up capital of Rs. Five or any higher amount prescribed by the Government under the Act.
Addition of word ‘Limited’ with name
Unlike a private company, which adds a ‘private limited’ after its name, every Public Limited Company must add ‘Limited’ after its name in every official publication.
Difference between Private & Public Limited Company registered in Chandigarh
There are several differences between a private & Public Limited Company registered in Chandigarh which have their own advantages & disadvantages in each of them. Hence, every entrepreneur may choose their business structure before establishing their company by analyzing each concept in depth. The primary differences have been provided below-
Points of Difference | Public Limited Company | Private Company |
Meaning | A Public Limited Company is publicly owned & traded on the stock exchange | A private company is privately owned & traded. |
Use of Suffix | Limited is added after the name of the Public Limited Company i.e. XYZ Ltd. | Private Limited can be used after the name of the private company LKJ Pvt. Ltd |
Directors | Three directors are required for the public limited company registration process | Two directors have required for setting up a private limited company. |
Independent Director | For a public limited company, independent directors must be recruited by the Board. | Since there is no public interest involved, no requirement for an Independent director |
Members or Shareholders | A minimum of seven members is required for public limited company registration | Three Members are required for a private limited company |
Start of Business | A certificate of commencement of business is required along with a certificate of incorporation. | Only a certificate of incorporation is required to start the business. |
IPO | A Public Limited Company is allowed to raise capital from the public by inviting them to contribute to the capital of the company in IPO.
. |
A private company cannot go for an initial public offering unless it gets converted into a Public Limited Company. |
Disclosure of Financial Statements | Every Public Limited Company is required to disclose its financial statements quarterly as well as financially. | Not required |
Process of Public Limited Company Registration Online in Chandigarh
Step 1-Obtain DSC for the proposed Company in Chandigarh
As a first step towards registration in Chandigarh, the company should first obtain a class 3 category digital signature certificate from a government-recognized certifying authority available online, which takes around one or two days. DSC is the most important part of filling incorporation application online with MCA as it enables the company to e-verify its documents & attachments online.
Step 2- Make an application for allotment of DIN in Chandigarh
Next, at least three directors of the proposed directors of the Public Limited Company will be required to obtain DIN to become directors of the company. Basically, there are two ways to apply DIN from the MCA portal-
i. File a separate application for DIN allotment through DIR-3 in Chandigarh
The Form DIR-3 is an e-form filed for the purpose of making an application online for the allotment of DIN for a single individual director who wishes to become a director in an existing company. To file this form, proof of identification such as PAN, Aadhaar Card, etc, and address proof of the proposed director are required.
ii. Apply for DIN through the incorporation form SPICe+ in Chandigarh
From 23.02.2020, the proposed director of a new company who is going to become a director for the first time could apply for DIN allotment within the SPICe+ form for up to three directors and doesn’t need to file the form separately.
Step 3-File the multipurpose form SPICe+ for incorporation in Chandigarh
The SPICe+ form for the incorporation of a new company which came into effect on 23 February 2020, is a multi-purpose web-based application that not only facilitates the incorporation of the company but also offers facilities in two parts A & B for –
- Application for allotment of DIN (up to three directors)
- Reservation of company name (RUN)
- Application for PAN and TAN (mandatory)
- Application for EPFO registration (mandatory)
- Application for ESIC registration (mandatory)
- Application for Professional tax registration (for Maharashtra only)
- Application for opening a bank account (mandatory to file)
- Allotment of the GST identification number (GSTN)
To start the process of incorporation, all these e-forms have to be downloaded in PDF format, filled & signed digitally, and submitted online. Further, the user has also to download & fill SPICe+ form and affix a digital signature followed by a certification of the fulfillment of all compliances from a professional such as CA/CS or CMA. There is no fee applicable for the incorporation of a company with less than 10Lakhs of authorized capital.
Step 4- Filling & Submission of MOA & AOA in Chandigarh
Next, the proposed company needs to file the drafted Memorandum of Association (MOA) & the articles of association (AOA) of the company in e-format. Memorandum & Articles of Association which represent the primary charter of the company as well as its bye rules for internal organization. The format for MOA & AOA has been prescribed in the form e-MoA (INC-33) and e-AoA (INC-34) respectively. After putting digital signatures by the subscribers to the Memorandum and Articles of Association, they could be submitted.
Earlier, the MOA & AOA needed to be filed physically, but now these have also been integrated with the incorporation form SPICe+.
Step 5-Approval & Getting COI in Chandigarh
After submission of the SPICe+ form along with all required documents & attachments, the MCA authority will carry out verification of the documents & on being assured of its genuine, may issue the Certificate of Incorporation which contains a unique CIN number along with PAN & TAN number & other unique identification numbers as allotted after approval of the SPICe+ Form by way of an email on the registered e-mail address.
Eligibility Criteria for Public Limited Company Registration in Chandigarh
i. Minimum amount of shareholders & directors- To start a Public Limited Company, the company needs to have at least seven members who subscribe to the Memorandum of Association of the company and at least three directors on its board. Though, there are no restrictions regarding the maximum number of directors or members a Public Limited Company can hold.
ii. Resident Director-The another requirement to start a Public Limited Company in India is having at least one resident director i.e. who has resided for at least 182 days during the immediately preceding year irrespective of their citizenship, who will be primarily responsible for the compliance of the company. It is to be noted that the number of days required for the calculation of 182 days could be in phases.
iii. Registered Office Address-Every Public Limited Company should have a temporary address at the time of registration of the company for communication purposes. Further, within a period of 30 days, the company needs to have a registered office address and proof of address must be submitted online.
iv. Unique Name of Company– For the purpose of eligibility, the company so proposed should be unique i.e. it should not be too closely similar to any already existing business and should not be a name in violation of the National Emblems Act 1950. The name of the company should suggest its business objectives which could be either a single objective or a multifaceted object.
v. Legal Object– The proposed company shall also have a legal object of business for its incorporation and not for any illegal purpose or posing any not misuse or harm the society, which should be described in the object clause of the Memorandum of Association (MOA) of the company.
vi. DIN for all Directors- As provided under sections 153 and 154 of the Companies Act, 2013, the Director Identification Number is a unique number mandatorily required to be obtained by a director in a company by making an application to MCA in e-form DIR-3. However, for a first-time director for a new company, an application for DIN allotment could be made along with the incorporation form SPICe with MCA.
vii. Digital Signature Certificate (DSC)-Since all the documents & attachments have to be filed online, it will be mandatory for the directors of the Public Limited Company to obtain a DSC. A DSC helps to verify the authenticity of filling documents filed & submitted during incorporation and thereafter.
viii. Certificate of Compliance– After all the documents are drafted & prepared, the prospective Public Limited Company will need to obtain a certificate of compliance from a professional such as a CA/CS/CMA, that all the declarations for incorporation of a Public Limited Company have been genuinely made.
Benefits of Public Limited Company Registration in Chandigarh
i. Limited Liability- Unlike a partnership firm, a Public Limited Company is a legal person whose assets& liabilities are separate from its members and thus the members of the company have limited liability towards the debts of the company, which cannot go beyond their agreed contribution to the capital of the company made by them in correspondence to the nominal value of their shares.
ii. Transparent & trustworthy– Since there is a larger public interest involved in a Public Limited Company in the form of investment, hence it is subject to higher compliances such as fillings of financial statements & annual returns, the Government demands more transparency from such companies in the form of compliances and intimations about changes from time to time.
iii. Easier Transfer of Shares- As per the provisions of the Companies Act 2013, the members in a Public Limited Company have no maximum limit, thus the shares of a Public Limited Company could be easily transferred from one person to the other. Especially for listed public companies, the prices of shares are quoted on a stock exchange, thus it is easier for anyone to sell or buy shares in the company
iv. Perpetual Succession– Unlike a partnership firm, a Public Limited Company enjoys perpetual succession, which means irrespective of the events like death, insolvency or any disability of its partners shall not affect its legal status. It continues to live until & unless it is legally dissolved through the prescribed procedures.
v. Ease to raise funds- A Public Limited Company having more members than any other business entity has access to more capital which also helps them in obtaining loans from banking & financial institutions and even from investors who join as a shareholder. Due to this, they can even enter negotiations to demand favorable rates of interest and conditions for repayment of loans. Additionally, a Public Limited Company can also offer debt securities for the purpose of extra funds for business expansion purposes.
vi. Better Growth and Expansion Opportunities-Compared to any other business entity, a Public Limited Company has several sources of gaining capital such as the fresh issue of shares, issue of debt securities, and loans from banks & financial institutions, there is always a strong probability of strong market presence and growth opportunities. Thus, it is significantly easier for a Public Limited Company to expand its business operations and get growth opportunities as compared to entities like private companies or LLPs who have to work relatively harder to raise funding or get investments.
Disadvantages of a Public Limited Company registered in Chandigarh
- Higher cost of Compliances– As aforementioned, in the case of a Public Limited Company, there is more public interest attached to the business management decisions and their consequences. Accordingly, it has to fulfill more compliances than other business entities, and hence there are higher costs of compliances.
- Problems with Decision Making- Unlike a private company, where the number of members is limited, the number of shareholders is significantly larger, and no key decision related to the business could be made without the approval of shareholders. Thus, for making any business decision, the board of directors has to lay it in front of the shareholders and pass a resolution for carrying matters forward, which takes a longer time & effort.
Documents Required For Public Limited Company registration in Chandigarh
i. Proof of Identification of all the proposed members and directors;
ii. Proof of residence of all the proposed directors and shareholders.
iii. Address Proof for the proposed registered address of the company such as utility bills.
iv. PAN Card of the proposed members;
v. In case the office property is rented, a NOC from the owner of the property
vi. Copy of proposed memorandum & articles of association of the company;
vii. DSC (Digital Signature Certificate) & DIN (Director Identification Number) of all the proposed directors.
Conclusion of Public Limited Company registration in Chandigarh
Therefore, a Public Limited Company registered in Chandigarh is a business entity that allows benefits of better funding & growth opportunities for entrepreneurs, which could be incorporated by following a simple and convenient process. So, get your company incorporated and start your journey today.