Convert a Private Ltd to Public Limited Company - Your Trusted Legal Partner

"Unlock New Opportunities - Convert to a Public Limited Company!" Expand Your Horizons - Transform Your Business Today! Ready to take your private limited company to the next level? Convert to a public limited company and open doors to a wider capital base, increased credibility, and enhanced growth prospects.

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Overview – Convert Your Private Limited into Public Limited

Converting your private limited company into a public limited company is a significant step that offers numerous benefits and opportunities for your business. By making this strategic transformation, you gain access to a larger pool of investors and the ability to raise capital through the stock market, facilitating substantial growth and expansion. The change in status also enhances your company’s credibility and reputation, inspiring confidence among customers, suppliers, and stakeholders.

With the broader platform of a public limited company, you can explore new markets, forge strategic partnerships, and take your business to new heights. The process involves obtaining board and shareholder approvals, amending the Memorandum of Association (MOA) and Articles of Association (AOA), meeting the minimum capital requirements, and appointing independent directors.

Embrace this opportunity to unlock the true potential of your company and set it on a path to greater success as a public limited entity.

What is a Private Limited Company and a Public Limited Company?

A Private Limited Company and a Public Limited Company are two common forms of business entities with distinct characteristics:

Private Limited Company:

  • Private Ownership: A Private Limited Company is a privately held business entity that restricts the right to transfer its shares. It cannot issue shares to the general public.
  • Shareholders: It has a minimum of two and a maximum of 200 shareholders, excluding employees and ex-employees who hold shares in the company.
  • Limited Liability: The liability of shareholders is limited to the amount unpaid on their shares, providing personal asset protection.
  • Naming Convention: A Private Limited Company is governed by the Companies Act and has to use the suffix “Private Limited” or “Ltd.” at the end of its name.
  • Suitability: It is suitable for small to medium-sized businesses looking for limited liability and a more organized corporate structure.

Public Limited Company:

  • Public Ownership: A Public Limited Company can issue shares to the general public, raising capital through public offerings on the stock exchange.
  • Shareholders: It must have a minimum of seven shareholders, and there is no maximum limit to the number of shareholders.
  • Limited Liability: Similar to a Private Limited Company, the liability of shareholders is limited to the amount unpaid on their shares.
  • Naming Convention: A Public Limited Company is also governed by the Companies Act and must use the suffix “Public Limited” or “PLC” in its name.
  • Suitability: It is ideal for large-scale businesses seeking substantial capital infusion and wider public participation in ownership.

Benefits of a Public Limited Company

A Public Limited Company offers several benefits that make it an attractive choice for businesses aiming for substantial growth and enhanced opportunities:

  • Access to Public Capital: One of the most significant advantages is the ability to raise capital by issuing shares to the general public through initial public offerings (IPOs). This provides the company with access to a vast pool of funds for expansion, acquisitions, and investments.
  • Enhanced Credibility: Being a publicly traded company enhances the company’s credibility and reputation in the market. It instills confidence among customers, suppliers, and business partners, leading to better business relationships.
  • Liquidity and Exit Strategy: As shares of a Public Limited Company are traded on the stock exchange, it provides shareholders with liquidity, allowing them to buy or sell shares easily. This liquidity also serves as an exit strategy for early investors and shareholders.
  • Growth Opportunities: A Public Limited Company has the potential for significant growth and expansion due to increased access to capital and resources. It can pursue large-scale projects and explore new markets more effectively.
  • Brand Visibility: Public companies generally have higher brand visibility and recognition due to their widespread presence in the market and the attention they receive from investors and the media.
  • Attracting Top Talent: Public Limited Companies often attract top talent as they offer opportunities for employee stock ownership plans (ESOPs) and better incentives, leading to a skilled and motivated workforce.
  • Increased Valuation: Being listed on the stock exchange can lead to increased valuation of the company, reflecting positively on its market standing and potential for growth.
  • Transparency and Compliance: Public Limited Companies are subject to stringent regulatory requirements and reporting obligations, which promote transparency and accountability in their operations.
  • Mergers and Acquisitions: Public companies have an advantage in mergers and acquisitions, as they can use their shares as currency for acquiring other businesses.
  • Diversification of Shareholders: A Public Limited Company has a diverse shareholder base, spreading the ownership across a wide range of investors, which reduces the dependency on a few stakeholders.

It’s important to note that while a Public Limited Company offers numerous benefits, it also comes with increased regulatory compliance and public scrutiny. Therefore, businesses considering going public should carefully evaluate their readiness and ensure they have the necessary resources and infrastructure to meet the demands of being a publicly traded company.

Checklist Requirements for Conversion of a Private Limited Company to a Public Limited Company

Converting a Private Limited Company to a Public Limited Company involves several regulatory and procedural requirements. Here’s a checklist to guide you through the process:

Preparation Stage:

  • Board Resolution:
    • Pass a board resolution proposing the conversion and calling for an Extraordinary General Meeting (EGM) of shareholders.
  • Shareholder Approval:
    • Obtain shareholders’ approval through a special resolution in the EGM, with the required percentage of votes in favor of the conversion.
  • Alteration of MOA and AOA:
    • Amend the Memorandum of Association (MOA) and Articles of Association (AOA) to reflect the change in the company’s status.

Share Capital Requirements:

  • Minimum Shareholders:
    • Ensure the company has a minimum of seven shareholders (as required for a Public Limited Company).
  • Minimum Authorized Capital:
    • Increase the authorized share capital to meet the minimum requirements prescribed for a Public Limited Company.

Appointment and Compliance:

  • Appointment of Independent Directors:
    • Comply with the requirements of having a specific number of independent directors on the board.
  • Compliance with Corporate Governance Norms:
    • Ensure compliance with additional corporate governance norms applicable to Public Limited Companies.

Registrar of Companies (RoC) Filings:

  • Form MGT-14:
    • File Form MGT-14 with the RoC within 30 days of passing the special resolution to approve the conversion.
  • Form INC-27:
    • File Form INC-27 with the RoC, which is a declaration of the compliance of the provisions of the Companies Act during the conversion process.
  • Form SH-7:
  • File Form SH-7 to record the increase in share capital and other related changes.

Statutory Compliances:

  • SEBI Compliance (if applicable):
  • If the company intends to list its shares on a stock exchange, comply with the regulations of the Securities and Exchange Board of India (SEBI).
  • Compliance with Stock Exchange Listing Requirements (if applicable):
  • Ensure adherence to the listing requirements of the stock exchange, if the company seeks to get listed.
  • Publication in Newspaper (optional):
  • Publish a notice regarding the conversion in a newspaper circulated in the relevant state or city.

Post-Conversion Steps:

  • Update Company Name and PAN:
  • Update the company’s name and PAN (Permanent Account Number) with the relevant authorities.
  • Issue Share Certificates:
  • Issue new share certificates reflecting the change in the company’s status to public limited.
  • Update Stationery and Communication:
  • Update all official stationery, website, marketing materials, and communication platforms with the new company status.

Summary:

It’s crucial to ensure that all the required documents are accurately filled out and submitted within the specified timelines to avoid any delays or complications during the conversion process. Seeking professional advice from legal experts or company secretaries can be beneficial to ensure compliance with all regulatory requirements during the conversion of a Private Limited Company to a Public Limited Company.

Documents Needed for Conversion of Private Limited Company Into a Public Limited Company

To convert a Private Limited Company into a Public Limited Company, the following documents are typically required:

  • Board Resolution:
    • A board resolution proposing the conversion and convening an Extraordinary General Meeting (EGM) of shareholders.
  • Shareholder Approval:
    • Special resolution passed by shareholders in the EGM, with the required percentage of votes in favor of the conversion.
  • Amended Memorandum of Association (MOA) and Articles of Association (AOA):
    • Copies of the MOA and AOA with the necessary amendments reflecting the change in the company’s status.
  • Declaration of Compliance (Form INC-27):
    • A declaration confirming compliance with the provisions of the Companies Act during the conversion process.
  • Form MGT-14:
    • Filing of Form MGT-14 with the Registrar of Companies (RoC) within 30 days of passing the special resolution for the conversion.
  • Form SH-7:
    • Filing of Form SH-7 with the RoC, which records the increase in share capital and other related changes.
  • Proof of Identity and Address:
    • Documents of directors and shareholders, such as PAN card, Aadhaar card, passport, or voter ID, as proof of identity and address.
  • Board Resolution for Appointment of Independent Directors:
    • A board resolution appointing the required number of independent directors as per the regulations.
  • Minutes of EGM:
    • Minutes of the Extraordinary General Meeting where the shareholders approved the conversion.
  • Bank Account Details:
    • Bank account details of the company, including cancelled cheques and bank statements.
  • Proof of Registered Office Address:
    • Latest utility bill, rent agreement, or property documents to verify the company’s registered office address.
  • Certificate of Incorporation and Business Registration:
    • Existing Certificate of Incorporation and Business Registration Certificate of the Private Limited Company.
  • No Objection Certificate (NOC) from Creditors:
    • If applicable, NOC from creditors approving the conversion.
  • SEBI Compliance (if applicable):
    • If the company intends to list its shares on a stock exchange, compliance with SEBI regulations and requirements.
  • Stock Exchange Listing Requirements (if applicable):
    • Compliance with listing requirements of the stock exchange, if the company seeks to get listed.

It’s essential to ensure that all documents are accurately filled out and comply with the applicable laws and regulations. Additionally, seeking professional advice from legal experts or company secretaries can be helpful to navigate the complexities of the conversion process and ensure smooth compliance with all requirements.

FAQs – Conversion of Private Limited Company to Public Limited Company:

The conversion involves passing a board resolution, obtaining shareholder approval through a special resolution, amending the MOA and AOA, filing necessary forms with the RoC, and meeting share capital requirements. Once completed, the company will be reclassified as a Public Limited Company.

    • A Public Limited Company must have a minimum of seven shareholders.

Yes, a Public Limited Company is required to appoint a specific number of independent directors on its board as per the applicable regulations.

    • Converting to a Public Limited Company offers access to public capital, increased credibility, liquidity for shareholders, brand visibility, and opportunities for growth and expansion.
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Compliance with SEBI regulations is required if the company intends to list its shares on a stock exchange. If listing is not planned, SEBI compliance may not be necessary.

The essential documents include board and shareholder resolutions, amended MOA and AOA, Form MGT-14, Form SH-7, and proofs of identity and address of directors and shareholders.

The conversion process typically takes a few weeks to complete, depending on the efficiency of filing documents and obtaining approvals.

Yes, a Private Limited Company can directly convert to a listed Public Limited Company by fulfilling the listing requirements of the stock exchange.

After conversion, the company must update its name, PAN, issue new share certificates, and update all official stationery and communication materials with the new company status.

Non-compliance during the conversion process can lead to delays, rejections, or legal consequences. It’s crucial to adhere to the relevant laws and regulations throughout the process.

Private Limited Company

₹ 6000 + GST includes govt.fee
    Benefits
  • Limited Personal Lliability
  • Investment Friendly
  • Increased authenticity of the business
    Package Inclusions
  • Drafting of MOA & AOA
  • Certificate of Company Incorporation
  • PAN & TAN of Company
  • DIN & DSC of 2 Directors
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