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Conversion of Private Company into Public Company

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  • Overview
  • Advantages
  • Disadvantages
  • Procedure
  • Documents
  • Fees
  • FAQs

What Conversion of Private Company into Public Company?

Private limited companies offer multiple benefits, but at some point, many private limited companies wish to change their companies into public limited companies to increase their scalability. Whenever we think about to convert private limited company into public limited company always one question comes in our minds why do we need to convert pvt ltd company into public limited company?” Its main objective is to connect with a large number of people to increase the credibility of the business. Public Companies provide the opportunity for Initial Public Offerings (IPO). In this, the company can even offer shares to the general public.

 

What is the Advantage of Private Company into Public Company?

  • Capital Raise: You can raise funds from the general public through share issuance. All public limiteds can issue the general public fixed deposits, debentures, and convertible debentures. 
  • Efficient Share Transfer: Shareholders of a public limited company can quickly and efficiently transfer their shares. You need to consult with a legal expert, as transforming shares of the business is very risky. 
  • Greater Credibility: Public limited companies need to disclose more information, including Inform regulatory bodies of any structural change, audit statements of accounts, and hold annual general body meetings for shareholders. 
  • Limited Liability: The Limited Liability concept continues even after converting a private limited to a public company. 
  • Free Transfer of shares: Public limited can freely transfer their shares under the SEBI Act & Companies Act.

 

What are the Disadvantages of Private Company into Public Company?

  • The rules and regulations of a public limited company are stricter than a private limited company. 
  • In a private limited company, the shareholders are well-known with the directors, so ensuring alignment with the company's vision and strategies is easy.
  • In a public company, it’s become challenging to keep things confidential as they must share everything with shareholders to build trust.

 

What is the Process of Conversion of Private Company into Public Company?

The following steps are required for the conversion of a private company into a public limited: 

  • Step-1 Hold a Board Meeting: Directors of the company need to arrange the EGM meeting with a proper date and agenda. The notice of the EGM needs to be notified at least seven days before and should involve the special resolution for conversion.  This information includes a date, time and venue of the EGM. 
  • Step-2 Call for Extraordinary General Meeting (EGM): You need to inform about Extraordinary General Meeting (EGM) date at least 21 days to  all the directors, members and auditor. 
  • Step-3 Increase Members and Directors: If the company has at least seven members, it needs to increase the number to at least 7. Also, you should have a minimum of 3 directors in the company. 
  • Step-4  File the application for company conversion: You need to File form 27 to convert the private limited to a public limited company. 
  • Step-5 Obtain the conversion certificate: Once you file the form 27 then you need to upload the certificate of your private limited company.Registrar of Certificate (ROC) verifies the submitted forms and documents. Upon compliance, issue a conversion certificate. The Private company can officially become public by passing a Special Resolution under Section 14. However, changing the company name and removing private property becomes necessary only when the Registrar of Companies (ROC) issues a new incorporation certificate.

 

What is Documents Required for Private Company into Public Company?

  • Identity Proof for Foreign Nationals: A valid passport is mandatory.
  • Identification Documents: Shareholders and Directors must submit Voter ID, Driving License, or Passport.
  • Address Proof: You must submit your address identity, including the current Electricity Bill, Telephone Bill, or the most recent Bank Account Statement for Shareholders and Directors.
  • Passport size Photograph: Submit the Passport-sized photos of Shareholders and Directors are required.
  • Business Office Verification: Documents like telephone or electricity bills are used to ensure the certified office address.
  • No Objection Certificate (NOC): Required NOC from the landlord of the certified office.
  • Rent Lease Agreement: If your office is on rent, you must submit the Rent Lease Agreement for the certified office. 
  • Income Tax Return (ITR): Submitting the filed ITR for the previous fiscal year is mandatory.
  • Notarized Documents for NRI or Foreign Nationals: The Director must be notarized if he is a Non-Resident Indian (NRI).
  • Bank Statements: You need to submit the latest audited Financial Statements.
  • Incorporation Certificates: Declaration of Incorporation, Memorandum of Association (MoA), and Articles of Association (AoA) should be furnished.

 

What is the Fees to Convert a Private Company Into Public Company?

Are you looking for Conversion of Private Company Into Public Company Fees then here the details for you. The Conversion of Private Company Into Public Company cost start from ₹30000 to ₹150000 along with Government Fee ₹ Nil and Professional Fee ₹ Nil.

Steps

Fees

Conversion Of Private Company Into Public Company Fee

₹30000 To ₹150000
Govt Fees Nil
Professional Fees Nil

 

FAQs

For updating your MOA and AOA you need to choose the name for the company and then the name should be verified by the ROC through the government ministry of corporate affairs website. It is necessary to verify the LLP name.   
 

A public company should have at least seven shareholders to operate. A private limited company needs at least 2 shareholders to run an entity. 
 

A public company must have at least five lakhs as paid-up capital. 
 

A significant rule is changing the company's name from a private company to a public one.
 

Here the minimum requirements for conversion of a company:-

Should have at least 7 shareholders/members
Should have at least 3 directors and one director should be Indian 
Required DIN for the directors 
DSC for the directors and shareholders 
Your company should not have any pending payment or processing
Your Company should not have defaulted in filing the balance sheet and annual return and payment of deposits/debentures/interest.
You need to take consent from members/shareholders and creditors (if any)
 

Following documents are required for converting a a private limited to a public limited company:-

Identity Proof for Foreign Nationals
Identification Documents
Address Proof
Passport size Photograph
Business Office Verification
No Objection Certificate (NOC)
Rent Lease Agreement
Income Tax Return (ITR)
Notarized Documents for NRI or Foreign Nationals
Bank Statements
Incorporation Certificates
 

 These are the procedure to convert a private limited into a public limited company:-

a.Hold a board meeting

b.Pass a resolution for conversion 

c.Call an extraordinary general meeting with shareholders 

d.Pass the resolution to increase the directors(if applicable)

e.ROC filing to alter Articles of Association

f.File form INR 27 

g.Attach the Certificate of Incorporation of private limited company 
 

Shareholders are the owners of a public limited company, but they elect a board of directors who controls and makes decisions on behalf of the business.
 

In a private limited company you can easily transfer the shares to only a few inventors but in a public limited company you can offer shares to the general public. Private limited companies required low compliance as compared to public limited companies.  
 

These are the advantages of  Public limited company:-

Public limited companies can freely transfer their shares under the SEBI Act & Companies Act.
Public limited companies need to disclose more information, including 
Inform regulatory bodies of any structural change, audit statements of accounts, and hold annual general body meetings for shareholders.
Shareholders of a public limited company can quickly and efficiently transfer their shares. You need to consult with a legal expert, as transforming shares of the business is very risky. 
The Limited Liability concept continues even after converting a private limited to a public minor. 
You can raise funds from the general public through share issuance. All public limiteds can issue the general public fixed deposits, debentures, and convertible debentures. 
 

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