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Private Limited to Public Limited
Medium to large-sized and capital-intensive businesses that require larger capital find it favorable to convert a Pvt Limited Company into a Public Ltd Company. This conversion facilitates easy raising of public investment, and there are no limitations on the maximum number of members/shareholders.
A public limited company can easily raise money from the 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 a 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.
What are the Requirements to Convert Pvt. Ltd. to Public Ltd?
By complying with the following requirements, a Private company can be converted in to public company, which are given bellow:
- Alteration of its articles by AOA, thereby deleting the three restrictions of a Pvt. company, as per Section 14 by passing a special resolution.
- Altering its name thereby removing the word “Private” from its name, as per Section 13 by passing special resolution.
- Moreover, steps should be taken to increase the number of members to at least 7 if the number of members is below 7, and if there are only 2 directors that the number of directors should be increase to at least 3.
- The company turns out to be public under Section 14 from the date of passing Special Resolution. However, the change in its name, by deleting the word “Private” becomes in effect only on the issue of fresh incorporation certificate by the ROC.
What are the Benefits of a Converting Pvt. Ltd. to Public Ltd
- Efficient Share Transfer : The Shareholders of a Public Ltd Company can transfer own shares with great ease and efficiently. They need to file the share transfer form, and after that hand over the share certificate to the buyer. The procedure of transferring a share to a new business structure is very risky. Consult Legal Experts for your better understanding.
- Raise Capital: You can leverage it to raise capital from the general public via shares which is gain an advantage of the public limited structure which have it all. This would, however, require listing on a stock exchange. All public limited companies can issue debentures, fixed deposits, and convertible debentures to the general public.
- 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. Public Companies catch the attention of more brand identity.\
- Limited Liability : The limited liability concept remains even after conversion from Pvt. Ltd. to Public Ltd.
- Free Transfer of Shares : The shares of Public Companies are freely transferable subject matter to SEBI Act and Companies Act
- 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 Pvt Ltd Company Registration in India
Digital Signature Certificates (DSC) of all Directors.
Director Identification Number (DIN) of all Directors.
Identity proof of all Directors.
Address proof of all Directors.
Passport size photographs of all Directors.
Where the premises are owned, the property papers.
No Objection Certificate from the owner.
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.
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