A conversion of Private Limited Company into Public Limited Company could be done with a view of enlarge the business concern. This conversion is preferred by my private limited companies for raising more funds from the market on lower cost in compare to loans from financial institutions. The company can raise funds by issuing of IPO and can accept deposits.
A Private company can be converted in to public company by complying with the following requirements:
- Alteration of its articles thereby deleting the three restrictions of a private company, by passing a special resolution as per Section 14; and
- Changing its name thereby deleting the word ‘Private’ from its name, by passing special resolution as per Section 13
The company becomes public from the date of passing Special Resolution under Section 14. But the change in its name, by deleting the word ‘Private’ becomes effective only on the issue of fresh certificate of incorporation by the Registrar of companies.
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- Digital Signature Certificates (DSC) of all Directors (if already have).
- Director Identification Number (DIN) of all Directors (if already have).
- PAN card and Aadhar card of all Directors.
- In case of NRI or Foreign National, documents of director(s) must be notarized or apostilled.
- Passport size photographs of all Directors.
- Proof of business address:
- Where the premises are owned, the property papers.
- Where the premises are on a rental basis:
- No Objection Certificate from the owner.
- Rent Agreement.
- Copy of utility bills (Not more than two months old)
- Certified copy of the latest financial statements.
- Copy of the latest Income Tax Return Acknowledgement
Advantages of Conversion
Raising capital from IPO: A Public Limited Company can raise funds through Public Issues. If a company is listed on stock market it can raise funds through many other sources such as Mutual funds and Investors.
Share Transferability: Shares in public limited company is easily transferable in compare to private limited company. Any shareholder can sell its share at any time and raise money.
Procedure for conversion of a Private Limited Company in to Public Limited
- Convene a board meeting to:
- For approving proposal for conversion of the company into a public company.
- For fixing time, date and venue for holding the general meeting of the company for passing the required special resolution.
- For approving notice for the general meeting along with the explanatory statement as required.
- For authorizing the company secretary or any other competent officer to issue notice of the general meeting on behalf of the board.
- Issue notice to all members of company.
- Hold the general meeting and pass the following special resolutions
- Special Resolution for alteration of articles for conversion.
- Special Resolution for alteration of memorandum (name clause).
- Copy of special resolution along with explanatory statement to be filled within 30 days with the registrar in Form MGT-14 and copy of altered Memorandum and Article shall be attached there with.
- Make an application in Form INC-27 to ROC for conversion of Private Company in to Public Company.
- Obtain from the Registrar of companies, fresh certificate of incorporation consequent upon conversion of a private company in to public company.
- The change of name will be noted in the memorandum and articles of association, letter heads, bills, common seal, if any, etc.