Private Limited Company into Public Limited Company2022-09-26T20:01:04+05:30

Conversion of Private Limited Company into Public Limited Company

Existing Private Limited Companies can convert itself into Public Limited Company as it is suitable for large scale business that have huge capital requirement. The shares of a public limited company can be easily listed and traded on a stock exchange. It can induct unlimited shareholders and there is no restriction on transfer of shares.

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    Introduction

    Conversion of Private Limited Company into Public Limited Company is favourable for medium to large sized and capital-intensive business that have larger capital requirement as it allows public investment to be raised easily and there is no limit on maximum number of members/shareholders. Public limited company can easily raise money from general public through IPO/FPO, debentures, deposits etc. and its shares can be listed and traded on a Stock Exchange in India. A Private Limited Company registered in India may convert itself into Public Limited Company by increasing the shareholder count to 7 (seven) and directors count to 3 (three) and by following the provisions of the Companies Act 2013. Therefore, nowadays, many Private Limited Companies are converting into a Public Limited Company in order to list on stock exchange and expand business.

    Advantages of Converting into Public Limited Company

    • No limit on Members/Shareholders

      A Private Limited Company after conversion into Public Limited Company can induct unlimited members into the company as there is no prescribed limit for the maximum number of members. It can have as many shareholders as its share capital can accommodate.

    • Raising Capital through Public

      One of the biggest advantages of a public limited company is that it can easily allocate shares to the public, raise money through public offering such as IPO/FPO, debentures, deposits etc. and can list on Stock Exchanges of India.

    • Transfer shares freely

      Shareholders of a Public Limited Company can freely transfer shares to any other person without any restrictions which gives them liquidity and easy exit option.

    • Greater Transparency

      Unlisted Public Limited Companies have been mandated by law w.e.f. 2nd October 2018 to issue shares and securities in Dematerialised form only. Public companies has to adhere stricter compliances, issue and facilitate transfer in DEMAT form only which provides greater transparency and avoids forgery.

    Minimum Requirements for Conversion of Company

    • Minimum 7 Shareholder/Member

    • Minimum 3 Directors (At least 1 of the Director shall be an Indian Resident)

    • DIN of Directors

    • DSC of Directors/Shareholders

    • No E-Forms should be pending for payment or processing in respect of the company

    • Company should not have defaulted in filing balance sheet and annual return and payment of deposits/debentures/interest

    • Consent from members/shareholders and creditors (if any)

    What is Included in Our Conversion Package?

    • Company name search and approval

    • Digital Signature Certificate (DSC) for Director/Shareholder

    • Preparation of Documentation, papers, declaration, affidavit for conversion into Public Company.

    • Filing of required Forms with the ROC

    • Altered Memorandum of Association (MOA) and Articles of Association (AOA)

    • Certificate of Conversion by Registrar of Companies (ROC)

    • Revised PAN and TAN for the Company

    Procedure for Conversion of Company

    • Collection of required documents

      In the very first step, the applicant has to send us the required documents of the Company as per the checklist. We will then verify the documents provided, check the eligibility of the entity for conversion and proceed towards next step.

    • Application for Digital Signature Certificate (DSC)

      In the next step, we shall apply the Digital Signature Certificate (DSC) of directors/shareholders for digitally signing the forms. If the directors/shareholders already have DSC, then this step can be skipped.

    • Submission of Form for Conversion

      After the DSC is generated, we need to hold meetings, prepare and complete the documentation for conversion and submit Form MGT-14 and Form INC-27 along with other required documents for approval to Government Authorities.

    • Get Certificate of Conversion

      After successful submission and approval of forms, we shall get a fresh certificate of incorporation consequent upon conversion from private company to public company.

    • Change of Details in other registrations

      After the conversion, we have to make changes in other registrations which was previously obtained by Company such as PAN, TAN, GST, EPF, Professional Tax Registrations etc.

    Documents Required for Conversion of Company

    • Certificate of Incorporation of Private Limited Company

    • PAN and TAN of Company

    • Memorandum of Association of Company (MOA)

    • Articles of Association of Company (AOA)

    • Details of Change in Director and Shareholder from the date of Incorporation or copy of shareholder register

    • Copies of Financial Statement, Auditor report, Income tax return (ITR) of the company previously filed

    • Pending Litigation against company (if any)

    • Details of any dues towards Income tax Dept, GST Dept, Banks or Financial institution, Central / State / Local Government Authorities.

    • Details of pending dues towards the Creditors, lender of the Company.

    • Any other documents as may be prescribed

    Effects of Conversion of Company

    • Alteration made in the MOA and AOA of company shall be noted in every copy of altered MOA and AOA.
    • All the rights and liabilities of the Private Limited Company in respect of any debt or obligation or contract entered into prior to such conversion shall continue in the name of the Public Limited company.
    • All the contracts entered into with various stakeholders’ viz., vendors, customers, service providers, consultants and employees shall continue upon conversion.
    • All legal proceedings shall continue in the name of the new company.
    • All the registrations obtained by the Private Limited Company such as GST, PAN, Import Export Code, Provident Fund, State Insurance Registration etc. is required to be updated.

    FAQ

    How much time is needed for conversion of Private Limited into Public Limited company in India?2022-07-11T16:59:50+05:30

    On average it takes 1-2 months of time for completion of conversion. However, this is dependent on the workload of the government authorities.

    Do I need to be physically present during this process?2022-01-28T01:18:37+05:30

    There is no such requirement, all the required documents are filed electronically, so you would not need to be physically present. You would just need to send us scanned copies of all the required documents and forms.

    Who can be a member of a Public Limited Company in case of conversion?2022-01-28T01:18:04+05:30

    Existing members of Private Limited Company whether individual or a body corporate shall become the member/shareholder of the private limited.

    How many members are required for conversion into Public Limited Company?2022-01-28T01:17:37+05:30

    There should be minimum of 7 members for conversion of Private Limited Company into Public Limited Company.

    Who can be the director of company on conversion?2022-01-28T01:17:05+05:30

    The existing directors/shareholders of Private Limited Company may become directors in the Public Limited Company on conversion.

    Can a company with secured loan convert itself?2022-01-28T01:16:35+05:30

    Yes, a Private Limited Company with secured loan may convert itself into Public Limited Company after obtaining No Objection Certificate (NOC) from such creditor.

    What is the maximum number of shareholders and directors that a Public Limited Company may have?2022-01-28T01:15:55+05:30

    There is no upper limit on the number of members/shareholder but there can be maximum of 15 directors in Public Limited Company, for further increase special approval of shareholder is required.

    Is the consent of shareholders required for conversion of Private Limited Company into Public Limited Company?2022-01-28T01:15:25+05:30

    Yes, consent of majority of members is mandatory for conversion of Private Limited Company into Public Limited Company.

    Is it required to have a Public Limited Company’s books audited?2022-01-28T01:14:57+05:30

    Yes, a public limited company should get its book audited and file the same with the Registrar of Companies (ROC) every year.

    After conversion into public limited company can I bring an initial public offer (IPO) and issue shares to the general public?2022-01-28T01:13:14+05:30

    Yes, after conversion you can bring an initial public offering (IPO) and issue shares to the public by complying with the procedure prescribed under law and regulations issued by SEBI

    Do I need to hold my equity shares of an unlisted public company in dematerialized form?2022-01-28T01:12:47+05:30

    Yes, you need to hold the equity share of an unlisted public limited company in dematerialized form only. All unlisted public companies are obliged to get their shares converted into Demat form.

    What are the post conversion compliances for a Public Limited Company?2022-01-28T01:12:00+05:30

    A Public Limited Company shall have to file a reconciliation of the share capital audit report on half yearly basis to the ROC, it is also required to file board resolutions and general meeting resolutions to the concerned ROC. The eligible public company also needs to follow provisions related to Independent Director, rotation of auditors, appointment of KMP etc. apart from regular annual compliances.

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