Conversion of Private Limited to Public Limited

Private limited companies offer significant benefits, but as they grow, many consider transitioning into a public limited company to expand scalability. A common question is: why go public? The answer lies in the distinct advantages public limited companies offer, including the ability to raise capital through an Initial Public Offering (IPO) and the opportunity to issue shares to the general public.

An IPO removes the restriction on the transferability of shares, a characteristic of private limited companies. Furthermore, public limited companies have no cap on the maximum number of members, allowing them to access funding easily. This flexibility and potential for growth are the primary drivers for converting from private to public.

Requirements for Conversion of Private Limited to Public Limited

To convert a private limited company into a public limited company, the following requirements must be met:

1.      Amendment of Articles of Association (AOA): Delete the three restrictions of a private company as per Section 14 by passing a special resolution.

2.      Change of Name: Remove the word “Private” from the company name as per Section 13 by passing a special resolution.

3.      Increase in Members and Directors: Ensure a minimum of seven members and at least three directors if these numbers are below the required thresholds.

4.      Passing a Special Resolution: The company is deemed public under Section 14 from the date of passing the resolution. The name change becomes effective upon issuance of a fresh incorporation certificate by the Registrar of Companies (ROC).

Benefits of Converting Private Limited to Public Limited

1.      Efficient Share Transfer: Shareholders can transfer their shares easily by filing the share transfer form and handing over the share certificate to the buyer.

2.      Raise Capital: Public companies can raise capital by issuing shares, debentures, or fixed deposits to the general public. Listing on a stock exchange enhances this capability.

3.      Enhanced Credibility: Public companies must disclose audited financial statements and conduct annual general meetings, ensuring greater transparency and building trust.

4.      Limited Liability: Shareholders’ liability remains limited even after conversion.

5.      Free Transfer of Shares: Shares are freely transferable, subject to the SEBI Act and Companies Act.

6.      Acceptance of Deposits: Public companies can accept deposits from the public under Section 76 of the Companies Act, 2013.

Documents Required for Conversion

1.      Identity Proof: PAN Card of shareholders and directors. Foreign nationals should provide a valid passport.

2.      Address Proof: Electricity bill, telephone bill, or latest bank statement of shareholders and directors.

3.      Photographs: Recent passport-size photos of shareholders and directors.

4.      Office Address Proof: Telephone or electricity bill of the registered office address.

5.      NOC from Landlord: No Objection Certificate for the registered office.

6.      Lease Agreement: If the office is rented.

7.      Financial Records: Latest audited financial statements.

8.      Incorporation Certificates: Memorandum of Association (MoA), Articles of Association (AoA), and Certificate of Incorporation.

9.      Income Tax Return: Filed ITR for the previous fiscal year.

10.  Director Documents: Notarized documents for foreign nationals or NRIs.

 

Minimum Requirements for Conversion

1.      Minimum of 7 shareholders.

2.      Minimum of 3 directors.

3.      Digital Signature Certificate (DSC) for at least 1 director.

4.      Director Identification Number (DIN) for all directors.

5.      No minimum paid-up capital requirement.

6.      Directors and shareholders can be the same individuals..

Registration Procedure for Conversion

1.      Issuance of Board Meeting Notice: Issue a notice to conduct a board meeting with the following agenda:

o    Approve the conversion from private to public limited.

o    Fix the date, time, and venue for the shareholder’s meeting (EGM).

o    Authorize a Company Secretary or Director to issue the notice.

2.      Hold Board Meeting: Approve the conversion and adopt amended MoA and AoA, subject to shareholder approval.

3.      Issuance of EGM Notice: Provide at least 21 days' notice to shareholders. A shorter notice period can be used with 95% member approval.

4.      Conduct EGM: Pass special resolutions for conversion and adopt the amended MoA and AoA.

5.      File MGT-14: Submit this form within 30 days of passing the special resolution with the following attachments:

o    Explanatory statement

o    EGM notice

o    Certified copy of the special resolution

o    Amended MoA and AoA

o    Consent for shorter notice, if applicable

6.      File INC-27: Submit this form within 15 days of passing the special resolution with similar attachments as MGT-14.

7.      ROC Approval: The ROC will review and approve the forms if all requirements are met.

8.      Certificate of Incorporation: Upon approval, the ROC will issue a new Certificate of Incorporation and cancel the previous one.

Post-Conversion Requirements

1.      Apply for a fresh PAN card.

2.      Update company stationery and letterheads with the new name.

3.      Inform tax authorities and other stakeholders of the conversion.

4.      Update bank account details.

5.      Print updated copies of the MoA and AoA.

6.     Ensure compliance with SEBI regulations if the company is listed on a stock exchange.

Fastzeal Support for Conversion

At Fastzeal, we streamline the process of converting your private limited company into a public limited company. Our team of experts ensures a seamless and cost-effective experience. Here's how we assist:

1.      Expert Consultation: Gain clarity on the conversion process and requirements.

2.      Document Preparation: We help compile and organize all necessary documents.

3.      Compliance Assistance: Ensure adherence to all legal requirements and avoid pitfalls.

4.      Timely Updates: Track progress through our platform and receive regular updates.

5.      Effortless Process: Leave the procedural complexities to us for a hassle-free experience.

Why Choose Fastzeal? Fastzeal is committed to providing high-quality legal and financial services. Our focus on simplifying processes ensures client satisfaction, and our experienced professionals are just a call away to guide you at every step.

Get Started with Fastzeal

1.      Purchase a service plan for expert assistance.

2.      Submit queries related to the conversion process.

3.      Provide necessary documents to our experts.

4.      Let us handle the procedural actions and legal compliance.

5.      Receive your fresh Certificate of Incorporation at your doorstep.

Choose Fastzeal for a smooth and professional transition from private limited to public limited!