Private to Public Limited Company

More funding opportunities: A Public Limited Company can raise funds from the public by issuing shares, which can be beneficial for expanding the business.

Unleashing Growth Potential: Transitioning from Private to Public Limited Company

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Overview of Converting Pvt.Ltd to Public Ltd.

Private limited firms are able to do so much on their own, but eventually, every private limited company wants to become public in order to increase their capacity. The standard rhetorical inquiry is, "Why go public?" The answer is dependent on a few key distinctions that exist between private limited corporations and public limited firms, both of which provide the idea of an initial public offering (IPO) and share ownership to the general public.

The idea of an IPO, or initial public offering, eliminates this restriction on the transferability of shares, which is a feature of private limited corporations. It has been decided that there is no maximum number of members for any public limited company, allowing them to generate money and have simple access to capital. Therefore, switching from private to public is best justified by growth and flexibility.

Benefits of converting Pvt Ltd to Public Ltd

Quick Transfer of Shares:

Ownership of shares in a public limited company can be transferred quickly and easily. They must submit the share transfer paperwork before giving the buyer the share certificate. A share transfer to a new business structure is a very dangerous process. For a deeper understanding, consult legal professionals.

Increase Capital:

A benefit of the public limited structure, which has everything, is that you can use it to raise money from the general public via shares. But doing so would necessitate going public on a stock exchange. All public limited businesses are permitted to offer the general public fixed deposits, convertible debentures, and debentures.

Liability Limitation:

Even after changing from a Pvt. Ltd. to a Public Ltd., the limited liability principle is still present.

Unrestricted Share Transfers:

Subject to the SEBI Act and the Companies Act, public company shares may be freely transferred.

Simple Deposit Acceptance:

Under the terms of Section 76 of the Companies Act of 2013, Public Companies are permitted to take deposits from the general public.

Eligibility Criteria of converting Pvt Ltd to Public Ltd

You must meet the following requirements before you can change your private limited business into a public limited company.

  • You should have seven people minimum.
  • At least three directors are required.
  • As a candidate, you must keep a minimum capital of 5 lakh rupees.
  • Before you can move forward with this private-to-public conversion, you must get the approval of the board members and the creditors for the company's finances and operations.

Process of converting Pvt Ltd to Public Ltd

An overview of the conversion process into a public limited company in accordance with the relevant provisions of the Companies Act of 2013 and the Companies (Incorporation) Rules of 2014 is provided below for your understanding:-

  • Release of Notice for Director Board Meeting
  • Adopt the board's conversion resolution. Establish the date, time, and location for the Extraordinary General Meeting of Shareholders. Approve the notice of the EGM and give the company secretary or director permission to issue it.

  • Conducting a board meeting and discussing the items on the agenda
  • To accept, subject to the consent of the shareholders, the conversion of Pvt. Ltd. to Public Limited. Subject to the consent of the shareholders, to approve a new set of articles and the memorandum of association. Set the general meeting's date, time, and location.

  • The announcement of the general meeting.
  • Giving members at least 21 days' notice before the meeting A general meeting may be convened with less notice if written or electronic permission from 95% of the members or more is obtained. To cast a vote at such a meeting. As outlined in the Articles, the notice period may be exercised.

  • Manage the general assembly
  • To pass a special resolution converting Pvt. Ltd. to a public limited company to approve the updated articles of association (AOA) and memorandum of association (MOA).

  • Submit MGT-14 form
  • 30 days after the special resolution has been passed, the document must be filed. • Addenda for Form MGT 14 Detailed Argument Advisory of EGM Authenticated copy of the special resolution approved by the EGM AOA Modified MOA Modified Give your approval for a shorter notice if an EGM is held.

  • Submit form INC-27
  • 15 days after a special resolution has been passed before filing. • Additional Files for Form INC 27: Authenticated copy of the special resolution adopted at the EGM AOA Modified MOA Modified If EGM was held with less notice, that was approved. Minutes of the members' general meeting

  • Getting MGT-14 and INC-27 Approved:
  • If the ROC is satisfied that the Private Company complied with the required conversion conditions, the forms must be authorized by the ROC.

Documents required for converting Pvt Ltd to Public Ltd

Following are the d documents required for converting Pvt Ltd to Public Ltd :

  • PAN cards for directors and shareholders.
  • Foreign nationals are required to present a current passport.
  • Shareholders' and Directors' Passports, Driver's Licenses, and Voter IDs
  • Address Proof: Shareholders' and Directors' Most Recent Bank Account Statements, Electricity Bills, and Telephone Bills
  • Photograph : Most recent shareholders' and directors' passport photos
  • Telephone and/or electricity bills from the registered office address are proof of a business address.
  • No Problem NOC must be obtained from the owner(s) of the certified office, according to a letter from the landlord.
  • Rent Lease: If there is a rent lease agreement, it must be approved.
  • ITRs filed for the prior fiscal year are required to be submitted.
  • Reminder: Foreign nationals or NRIs must have their documents notarized.
  • Financial Statements: a copy of the most recent, duly certified financial statements/li>

Requirements for converting Pvt Ltd to Public Ltd

A private corporation may become a public company by meeting the standards listed below, which are as follows:-

  • By adopting a special resolution, AOA may amend its bylaws, eliminating the three prohibitions that apply to private companies under Section 14;
  • Changing its name by adopting a special resolution, in accordance with Section 13, to remove the word "Private";
  • Furthermore, if there are less than 7, actions should be taken to raise that number to at least 7, and if there are only 2 directors, steps should be taken to raise that number to at least 3.
  • As of the date the Special Resolution was passed, the corporation is deemed to be public under Section 14. The word "Private" was removed from the company's name, but this modification doesn't take effect until the ROC issues a new certificate of incorporation.

Frequently Asked Questions

No, the procedure of forming a company in India is entirely online. You do not need to be physically there at all because you can complete all documents electronically. All the necessary forms and documentation must be digitised and sent to us.

Yes, regardless of its revenue, a private limited firm is required to employ an auditor. In fact, within 30 days of formation, an auditor must be engaged. Given that penalties for non-compliance can reach millions of rupees and possibly result in the blacklisting of directors, compliance is crucial for a private limited business.

The Ministry of Corporate Affairs makes available the company's registration certificate online.
 

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