Private Limited to Public Limited |

Conversion of a Private Limited Company into Public Limited Company

In the Indian Corporate Sector, a Private company enjoys every benefit which is available to a Public Company. However, when it plans to expand its business operation, it cannot issue debentures and shares to the public to raise capital. Therefore, the Conversion of Private Limited to Public Limited opens new opportunities, mainly in the form of market reach and fundraising.

Benefits of Conversion of Private Limited into Public Limited

Listing of Shares-

Through conversion of private limited to public limited company, the entity can list its shares in a recognised stock exchange.

Raise Capital

All public limited companies can issue debentures, fixed deposits, and convertible debentures to the general public.

Easy Share Transfer

By going for the process of conversion of private limited to public limited company, the shares can be easily transferred from one shareholder to another shareholder.

Greater Reliability

Public limited companies requires to inform the regulatory bodies of any structural change, disclose their audited statement of accounts, and hold annual general body meetings for all the shareholders. These compliance procedures bring an immense deal of credibility to the entity.

Easy Acceptance Of Deposits

As per the subject to Section 76 of Companies Act 2013, the rules Public Companies can accept deposits from public.

Documents Required for Conversion of Private Company to Public Company

PAN Card details of the Shareholders and Directors;

A copy of Passport of the Foreign Nationals;

A copy of Voter ID/ Driving License/ Passport of Shareholders and Directors;

Address Proof in the form of Telephone Bill/ Electricity Bill of Shareholders and Directors;

Latest Passport-sized photograph of Shareholders and Directors;

Utility Bill in the form of Electricity Bill/ Telephone Bill/ Water Bill of the registered office;

No-Objection Certificate from the owner of the premise used as Registered office;

Rent Agreement or Lease Deed of the registered office;

In the case of Foreign National, all the documents of the director(s) must be duly notarised;

A copy of the Company’s Incorporation Certificate;

A copy of the company’s MOA (Memorandum of Association) and AOA (Articles of Association);

Copies of the latest audited Financial Statements;

A copy of the ITR (Income Tax Return) filed by the company.

Minimum Requirements for Conversion

Minimum 7 Shareholders

DSC foratleast 1 Director

DIN for all directors

Director and shareholder can be the same person

Minimum 3 Directors

Procedure for Conversion into a Public Limited Company

Procedure for Conversion into a Public Ltd. Company in pursuant to applicable provisions of the Companies Act, 2013 & the Companies (Incorporation) Rules, 2014 are given bellow

Issue Notice for Holding Board Meeting

The directors of a Private Limited Company need to send a notice for holding BM (Board Meeting). The notice must be sent at least seven days before the date of BM. It must also contain the proposed agenda of the meeting. The items included the proposed agenda are as follows:

To Pass Board Resolution for Conversion;

Fix time, date, place, and day of the Extraordinary General Meeting (EGM);

Approval of the notice for calling EGM together with the Explanatory Statements

Hold Board Meeting

In the BM, the directors of the company must approve the following items:

To approve the Conversion of Private Company to Public Company;

Finalise the list of Creditors;

Approve the draft of MOA (Memorandum of Association);

Approve the draft of AOA (Article of Association);

Fix time, date, and venue for holding EGM (Extraordinary General Meeting)

Send Notice for Holding EGM

The directors need to send a notice for the EGM at least twenty-one days before the date of the EGM.

Convene EGM

A Special Resolution (SR) for authorising the conversion of private company to public company should be passed in the EGM. Shareholders also need to approve the draft of the new AOA and MOA in the meeting.

File MGT-14

After passing the SR, Directors need to file form MGT- 14 with the Registrar of Companies (ROC) within thirty days from the date of the EGM.

File INC- 27

Directors also need to file INC- 27 with the ROC within fifteen days from the date of EGM.

Approval of MGT- 14 and INC- 27

The Registrar of Company (ROC) needs to approve the form filed if he is satisfied that the Private Company fulfills all the requirements.

Certificate of Incorporation (COI)

ROC will issue a COI after the approval of MGT- 14 and INC- 27.

Difference between Private Company and Public Company

Use of Suffix

The word “Limited” needs to be used as a suffix after the name of a public company whereas in a Private Company, the word “Private Limited” needs to be used after its name.

Minimum Members

Minimum seven members are required to form a public limited company whereas in private limited company, minimum two members are required.

Maximum Members

In public limited company, there is no limit on maximum number of members whereas the maximum limit of the members in a private limited company is 200.

Minimum Directors

At least three directors are required in a public limited companywhereasin private limited company at least two directors are required.

Subscription of Shares

Public subscription of shares is allowed in public limited companies whereas in private limited companies, Public subscription of shares is not allowed.

Quorum at AGM

In Public Limited Company, Five members must be present personally at AGM whereas in Private limited company, two members must be present personally at AGM.

Shares Transferability

Shares can be transferred freely in public limited companies whereas in Private Companies, Shares are not freely transferred.

Funding

A Public Limited Company can raise funds by issuing IPOs (Initial Public Offer) in the general public whereas A Private Limited Company can only raise funds through Private Investors.

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