Conversion of Private Limited Company to Public Limited Company – Step-by-Step Procedure

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Conversion of Private Limited Company to Public Limited Company – Step-by-Step Procedure

Most new businesses often start as private limited companies. However, as the business scales, one often realises that the restrictions imposed on private limited companies act as hurdles for scaling the business. For instance, private limited companies cannot raise funds from the public. Also, there is a limit on the number of members that can be added to the private limited companies. What’s the solution then?

It's simple! Just convert your private limited company to a public limited company. How? Let’s find out!

Private Limited Company vs. Public Limited Company

Before discussing the procedure for conversion of a private limited company to a public limited company, let’s understand the difference between both of them.

 

Sr. No.

Parameters

Private Limited Company

Public Limited Company

1

No. of Members

A private limited company can have a maximum of 200 members

There is no limit on the number of members that a public limited company can have

2

Public Subscription of Securities

A private limited company cannot invite the public to subscribe to its shares

A public limited company can invite the public to subscribe to its shares

3

Transfer of Shares

A private limited company shall restrict the rights to transfer its shares

A public limited company is not obliged to restrict the transfer of its shares

4

Initial Public Offer

As a private limited company cannot invite the public to subscribe to its shares, therefore, it cannot issue an initial public offer. This acts as a hindrance especially when the company desires to scale at a huge level

A public limited company can issue an initial public offer as there’s no restriction on it to invite the public to subscribe to its shares

 

Following were the key differences between the private and public limited company that indicates the benefits of conversion from a private limited to a public limited company.

Process of Converting a Private Limited Company to a Public Limited Company:

If you are willing to convert your private limited company to a public limited company, then here are the key steps for the same:

Convene a Board Meeting:

The directors shall convene a board meeting to discuss the agenda for the conversion of the company. The notice for convening the board meeting shall be sent to every director of the company. The agenda of the board meeting shall include the following:

  1. Adoption of the updated or new Articles of Association (AOA).
  2. Adoption of the updated or new Memorandum of Association (MOA).
  3. Conversion of the private limited company to a public limited company.
  4. Approval for conducting an Extraordinary General Meeting (EGM) of the shareholders as well as deciding on the date, time and place where the EGM shall be held.
  5. Passing of the board resolution for increasing the number of directors. A public limited company requires a minimum of 3 directors as against a private limited company that requires a minimum of 2 directors only.

Holding the EGM:

The notice for conducting the EGM shall be sent to all the members as well as the directors and auditors of the company. The notice shall be given at least 21 days before the EGM. In the EGM, the shareholders shall pass a special resolution for approving the conversion of the private limited company to the public limited company.

ROC Filings:

Once the resolution is passed in the EGM, the company shall comply with all the ROC filings and formalities. Following forms shall be filed with the ROC:

E-Form MGT-14:

This form shall be filed within 30 days after the passing of the special resolution.
The form shall be filed along with the following attachments:

 

  1. Notice of the EGM along with the explanatory statement as per Section 102 of the Companies Act 2013
  2. Certified copies of the resolution passed in the board meeting and EGM
  3. Copy of the new or updated Memorandum of Association
  4. Copy of the new or updated Articles of Association 

E-Form INC-27:

This form is for the conversion of the private limited company to the public limited company and shall be filed within 15 days after passing the resolution in the EGM of the company. Following attachments shall be filed along with Form INC-27:

  • Copy of the new or updated Memorandum of Association
  • Copy of the new or updated Articles of Association 
  • Minutes of the meeting
  • Copy of the resolutions passed in the board meeting and EGM
  • List of members of the company along with requisite details


Documents Required for Conversion of Private Limited Company to Public Limited Company
 

Following are the required documents for conversion of a private limited company to a public limited company:

  1. Copy of the director’s PAN card and Aadhaar card 
  2. Copy of director’s passport, voter ID card or driving license
  3. Proof of registered office of the company
  4. Utility bills of the registered office of the company
  5. Resolutions passed in the board meeting and EGM of the company
  6. New or updated MOA
  7. New or updated AOA
  8. Any other document as may be required

In a Nutshell


Following were the legalities for conversion of your private limited company to a public limited company. In case you want to expand your business operations and benefit from public funding, then it’s time you convert your private limited company to a public limited company. In case of any assistance, feel free to contact your eAuditors! 

 

 


Author : Dipen

Date     : 29-Aug-2022


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