Public Limited Company Formation India: Who Needs It and Who Does Not
Whether Public Limited Company Formation India applies to a given business is the first thing worth settling, and it is where most of the early questions land. The questions below are the ones raised most often in practice; the full scope of the service is on the Public Limited Company Formation India page.
What is the minimum number of shareholders and directors required for a Public Limited Company?
Minimum 7 shareholders (members) and minimum 3 directors. There is no maximum on shareholders. At least one director must have stayed in India for a total of at least 182 days during the financial year, as required under Section 149(3) of the Companies Act 2013 (for a newly incorporated company the requirement applies proportionately at the end of the financial year of incorporation).
In practice: Coordinating 7 subscriber-shareholders for the founding documents is the single largest logistical challenge of incorporating a Public Limited Company. Every subscriber must sign the subscriber sheet of the MOA, and all 7 must pay up their subscription before INC-20A can be filed. Incorporation can be delayed simply because one of the 7 founding subscribers is unavailable, out of the country, or needs documents apostilled. Plan this ahead.
What annual filings must a Public Limited Company submit to the Registrar of Companies?
Mandatory annual MCA filings include: AOC-4 (Annual Financial Statements) — within 30 days of the AGM (30 October for an AGM held on 30 September); MGT-7 (Annual Return) — within 60 days of the AGM (29 November for an AGM held on 30 September); DIR-3 KYC — for each director holding a DIN, once every third consecutive financial year, by 30 June; MSME Form I — if outstanding dues to micro and small enterprise vendors exceed 45 days, by 31 October and 30 April; and any other event-based filings arising during the year. For listed companies, SEBI LODR requires additional filings to the stock exchange — quarterly financial results within 45 days, annual audited financial results within 60 days of the financial year end (Regulation 33), submission of the annual report to the stock exchange under Regulation 34, and various event-based disclosures.
In practice: We build a proactive calendar for every client and initiate each filing well before the due date.
Is a statutory audit mandatory for a Public Limited Company?
Yes. Statutory audit under Section 139 of the Companies Act 2013 is mandatory for every Public Limited Company, regardless of turnover, paid-up capital, or activity level — including dormant companies and companies in their first year of operations. The statutory auditor must be a Chartered Accountant or a firm of Chartered Accountants holding a valid Certificate of Practice from ICAI. The first auditor must be appointed by the Board within 30 days of incorporation (with Form ADT-1 filed within 15 days of the appointment) and holds office until the conclusion of the first AGM; the auditor appointed at the AGM thereafter holds office for a five-year term (subject to rotation limits) without requiring annual ratification at each subsequent AGM — the annual-ratification requirement in the original Section 139(1) proviso was removed by the Companies (Amendment) Act 2017. Where auditor rotation applies (listed companies and the prescribed classes of unlisted companies), Section 139(2) allows an individual auditor one term of five consecutive years and an audit firm two terms of five consecutive years (ten years in total), followed by a five-year cooling-off period.
In practice: Auditor rotation requirements — mandatory for listed companies and certain other specified classes of public companies — mean that a founder or promoter cannot appoint the same CA firm for the life of the company. For clients approaching the maximum tenure, we help with a structured transition to a successor auditor that does not disrupt the audit timeline.
Is a secretarial audit required for Public Limited Companies?
Secretarial audit under Section 204 applies to every listed company and to other public companies above the prescribed paid-up capital or turnover thresholds (Rule 9 of the Companies (Appointment and Remuneration of Managerial Personnel) Rules 2014), and the Secretarial Audit Report (Form MR-3) is annexed to the Board's Report presented at the AGM. For listed companies, SEBI LODR Regulation 24A (in force from 1 April 2025) also requires the secretarial auditor to be appointed with shareholder approval at the AGM for a fixed term — an individual for one five-year term, a firm for up to two five-year terms. Separately, Section 203 requires listed companies and other companies above the prescribed paid-up capital threshold to appoint a whole-time Company Secretary as Key Managerial Personnel.
In practice: Smaller unlisted Public Limited Companies below the paid-up capital and turnover thresholds are not required to conduct a secretarial audit. However, many opt for one voluntarily before an IPO or external investment, as it provides a clean compliance certificate that satisfies investor due diligence requirements.
What is the role of the SEBI (LODR) Regulations 2015 for a listed Public Limited Company?
SEBI (Listing Obligations and Disclosure Requirements) Regulations 2015 — known as LODR — govern every company listed on a recognised stock exchange in India. These obligations begin from the date of listing, not from the date of filing the DRHP.
In practice: SEBI LODR compliance is a full-time function for mid-size listed companies. It requires a dedicated compliance officer, a mechanism for board and committee meetings to comply with quorum requirements, and systems for real-time disclosure of material events. Many mid-size listed companies retain a CA firm and a PCS together to manage these obligations. PNPC provides the CA-side of this engagement — financial disclosures, audit, and SEBI financial reporting — as a retained function.
What is the difference between an ordinary resolution and a special resolution — and when does a Public Limited Company need each?
An ordinary resolution is passed by a simple majority of votes cast (more than 50%). A special resolution requires at least 75% of votes cast in favour. Ordinary resolutions suffice for routine matters: appointing directors, approving financial statements, declaring dividends. Special resolutions are required for, among other things: altering the name or objects clause of the MOA, altering the AOA, voluntary winding-up, reduction of capital, buyback of shares above the limit that the Board can approve without a general meeting, and numerous other significant decisions. For listed companies, many related party transactions also require shareholder approval by ordinary resolution, with interested parties excluded from voting.
In practice: For companies converting from Private Limited to Public Limited, the conversion itself requires a special resolution. We advise clients to carefully assess whether all shareholders are likely to support the conversion before scheduling the extraordinary general meeting — a blocking minority can stall the process.
What is a Promoter for a listed Public Limited Company, and what are the lock-in obligations?
A 'promoter' under SEBI (ICDR) Regulations 2018 includes persons who have been instrumental in the formation of the company, who hold or control shares in the company, and who are named as promoters in the offer documents. In an IPO, shares held by promoters are subject to lock-in — a period during which they cannot be sold: the minimum required promoter contribution (typically 20% of post-issue paid-up capital) is locked in for a prescribed period (generally 18 months in the commonly applicable case), and the balance of pre-IPO promoter holdings for 6 months; confirm the current ICDR conditions, as the period depends on the nature of the issue. Promoter holdings below the minimum required contribution threshold must be locked in for 6 months from the date of allotment in the IPO.
In practice: Pre-IPO share transfers to promoters at a price below the issue price — which occurs in some cases where founders sell shares to a strategic investor before the IPO — can create issues around lock-in and valuation, and, for fresh issues of shares before 1 April 2025, historical angel tax exposure under Section 56(2)(viib) of the Income-tax Act 1961 (the provision was omitted by the Finance (No. 2) Act 2024 with effect from 1 April 2025). These transactions should be reviewed by a CA with SEBI experience well before the IPO filing.
What is the minimum number of independent directors a listed Public Limited Company must have?
Under SEBI LODR Regulation 17 and Section 149(4) of the Companies Act 2013: every listed public company must have at least one-third of its total directors as independent directors (rounded up where not a whole number). Additionally, the listed company must have at least one woman director. If the chairperson of the board is a non-executive director who is not a promoter or related to the promoter, the company may have one-third independent directors; otherwise the minimum rises to at least half the board. All independent directors must be registered on the Indian Institute of Corporate Affairs (IICA) online proficiency self-assessment test portal.
In practice: Many mid-size promoter-led companies approach an IPO with a board comprising only promoter directors, and realise too late that they need to identify, onboard, and run multiple board meetings with new independent directors before SEBI will approve their DRHP. Identifying credible, available independent directors well ahead of listing — not just before the SEBI filing — is strongly advised.
Are there any mandatory committees required for a Public Limited Company?
Listed public companies must constitute: an Audit Committee (Section 177, SEBI LODR Regulation 18) with a majority of independent directors, chaired by an independent director, with at least one member having financial and accounting knowledge; a Nomination and Remuneration Committee (Section 178, LODR Regulation 19); a Stakeholders' Relationship Committee (Section 178(5), LODR Regulation 20) for companies with more than 1,000 shareholders.
In practice: Unlisted public companies that meet the prescribed thresholds are subject to the Companies Act provisions for audit and nomination committees, but not to the SEBI LODR overlay. For pre-listing companies, we recommend constituting these committees 12 months before the IPO target date to demonstrate operational governance to SEBI.
Where this sits in the wider engagement
Public Limited Company Formation India rarely arrives on its own. The statutory basis and the current requirements are set out on the Public Limited Company Formation India service page, and the related services are grouped under Business Setup.
What PNPC does
PNPC Global has practised since 1986 across India and the UAE. On Public Limited Company Formation India we take the work end to end — reviewing the facts, preparing and filing what is required, and dealing with the authority through to closure.