Overview of Private Limited to Public Limited Company Conversion

To some extent, a private limited company provides a lot of benefits and facilitates in its operations. However, private limited companies may wish to turn it into a public limited company to enhance its scalability. The distinct difference between a public limited company and a private limited company is that a public limited company can offer Initial Public Offering (IPO), and shares to the general public.

If a private limited company wants to raise funds from the public by increasing its members, it needs to go public. Hence, a public limited company is a must when you want to increase funds for the expansion of the company. Hence, the growth and flexibility of a company are the reasons for converting a private limited company to a public limited company. 

Overview of Private Limited to Public Limited Company Conversion

Alternation of AOA of the public limited company according to Section 14 of the Companies Act, 2013 by passing a special board resolution.

If the member of the existing company is below 7, it must be made at least 7, and the number of directors must be at least 3.

Altering its name is mandatory as it was a Private Limited company and now you have to add a suffix with “Limited” Company as per section 13 of the Companies Act 2013 by passing a special resolution.

The co. will turn to a Public Limited u/s 14 of the Comp. Act, 2013 from the date of passing special board resolution by deleting Private Limited, and the ROC will issue a fresh incorporation certificate.

What are the Benefits of Converting Private Limited to a Public Limited Company?

Share Transfer Facility to the Public

The shareholders of a public limited company can transfer their shares to another party very easily and smoothly. They only need to fill out the share transfer form and hand over the share transfer certificate to the buyers.

Facility to Raise Capital

The main and fundamental benefit of a public limited company is selling shares and raising funds for spreading and expanding the company and its project or new branches. However, to avail of the facility, the companies must enlist their names to the stock exchange. All public limited companies have the facility to issue fixed deposits, debentures, and convertible debentures to the public.

Greater Reliability

Public limited companies have to inform all structural changes and disclose the audit report of accounts to the annual general meeting. This compliance brings immense reliability to the public limited company. This also grabs the attention of people and spreads brand identity.

Limited Liability

The liability of a private limited company converts to a public limited company. So, as per the rule, the liability will also be modified.

Free Share Transfer Facility

The shares of a public limited company can easily and freely be transferred to another person/ share buyer by following the SEBI Act and Companies Act 2013.

Easy Acceptance of Deposits

According to the rules of section 76 of the Companies Act 2013, a Public Limited Company can accept fund deposits from the public.The shares of a public limited company can easily and freely be transferred to another person/ share buyer by following the SEBI Act and Companies Act 2013.

Documents for Converting a Private Limited to Public Limited Company

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PAN Card of Directors and Shareholders

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Passport/Driving Licenses/Voter ID Card/Adhaar Card

Identity Proof Of the Directors / Shareholders

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Telephone Bill/electricity bill/Latest Bank Account Address, not later than 2 months

Address Proof Of the Directors / Shareholders

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Passport Size Photograph

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electricity bill/telephone bill, rent agreement of the registered office of the company

Business Address Proof

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Declaration of Incorporation, MOA AOA.

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Income Tax Return of the Previous Year

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Attested Copy of latest Financial Statement.

Minimum Requirement of Conversion

Minimu 7 Shareholders
Minimu 3 Directors
DIN of all Directors
DSC of all Directors
Shareholder and Directors can be same person

Procedure for conversion into Public Limited Company

The conversion of a Private Limited Company to a Public Limited Company has been done by following the Companies Act 2013 and Companies Incorporation Rules 2014.
Notice issuing for a Board Meeting of Directors

A board meeting is conducted with directors. The proposed agenda needs to circulate and includes:

  • Board Resolution related to Company Conversion.
  • Fixing date, time and venue for meeting with Shareholders.
  • Approval of Notive of Extra Ordinary General Meeting 
Board Meeting and Agenda Items Discussion
  • Approval of the conversion from Private to Public Limited Company is also subject to the approval of shareholders. Arranging a meeting with them is also mandatory
  • Setting up a new MOA and AOA is required to get approval from the shareholders.
  • It is essential to fix a date, time, and venue for a general meeting
General Meeting Notice Issuing
  • 21 days before the general meeting, you have to issue a notice to all members.
  • If more than 95% of the members provide approval in electric mode, you can arrange the meeting on short notice.
  • The notice duration would be as per the Articles.
Conducting a General Meeting
  • The matter of discussion would be a resolution for the conversion of a Private Limited Company to a Public Limited Company.
  • The adoption of MOA (Memorandum of Association) and AOA (Articles of Association)
File form MGT- 14

File out Form MGT-14 within 30 days of passing the special resolution in Extra Ordinary General Meeting.

Attachments to Form MGT 14
  • Notice of EGM
  • Explanatory Statement with Notice for EGM
  • Consent from Shareholders if meeting held at shorter Notice period.
  • Ammended MOA (Memorandum of Association) and ammedned AOA (Articles of Association)
  • Certified copy of passed EGM Resolution
File form: INC-27

It needs to be filled within 15 days of passing the special resolution with some attachment

Attachments to Form INC 27
  • Certified copy of the passed Resolution of EGM
  • Minutes of General Meeting of the Members
  • Ammended MOA (Memorandum of Association) and ammedned AOA (Articles of Association)
  • Consent from Shareholders if meeting held at shorter Notice period.
Certificate of Incorporation from ROC
As soon as forms MGT 14 and INC 27 are approved by the ROC, the former company incorporation will be cancelled and a new certificate of company incorporation will be provided against as the Limited Company.

Comparison

PARTICULARS
PRIVATE LIMITED COMPANY
PUBLIC LIMITED COMPANY
LIMITED LIABILITY PARTNERSHIP
ACT
COMPANIES ACT, 2013
COMPANIES ACT, 2013
LLP ACT, 2008
Registration Requirement
MANDATORY
MANDATORY
MANDATORY
SEPERATE LEGAL ENTITY
YES
YES
YES
LIABILITY PROTECTION
LIMITED
LIMITED
LIMITED
STATUTORY AUDIT
MANDATORY
MANDATORY
MANDATORY
OWNERSHIP TRANSFER LIABILITY
YES
YES
YES
PERPETUAL SUCCESSION
YES
YES
YES
FOREIGN PARTICIPATION
ALLOWED
ALLOWED
NOT ALLOWED
TAX RATE
MODERATE
MODERATE
HIGH
STATUTORY COMPLIANCE
HIGH
HIGH
MODERATE

How we can help in Appointment of Director

Fill our Application Form.

⟶1

Share Information about the Incorporation

⟶2

Our team will collect Documents and get relevant documents signed.

⟶3

CA / CS will submitt the forms and Documents to ROC.

⟶4

Congrats! Your Private Limited is not Limited Company.

⟶5

Is Name Alteration Mandatory during Private To Public Limited Company Conversion?
Yes, you have to add a suffix to your company with the name of the company. If the name of the company is XYZ Private Limited, it would be XYZ Limited.
A public limited company has a lot of compulsions as they deal with the money of the public to expand the company. It is required to follow the rules of incorporation and statutory compliance on its part. The regulatory obligations are not limited to income tax. The obligations remain in the hands of MCA/ROC, SEBI, RBI, etc
The tax rate for a limited liability company is up to 25% of the earnings.
An alteration of MOA and AOA is done after passing the special resolution in the AGM (Annual General Meeting) and after obtaining prior approval from the Register of Companies (ROC).
A shareholder is also the owner of a public limited company. They elect the board of directors, who directly manage and make decisions on behalf of the entire shareholders.
The time is variable. The moment you provide all the necessary documents, our team (CA/CS) will submit them to the ROC for approval. The work will be done flawlessly and quickly.
No, you just have to modify it and change the name in the records.
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