CONVERSION OF PRIVATE LIMITED COMPANY TO PUBLIC COMPANY

Conversion of Private Company into a Public Company opens a new door of opportunities, especially in the form of fundraising and reach of the market. The company can raise funds through Public Issue and accept deposits too. This structure is appropriate for the medium and large scale businesses. The conversion will be followed by the approval from Government and alteration to MoA & AoA.

Further, a minimum of 7 members and 3 directors are required for conversion of Pvt Ltd to Public Ltd. The rights, liabilities, powers, and obligations remain the same for the company even after the conversion. Transfer of shares is possible as the restriction on transfer is removed on conversion.

BENEFITS OF CONVERSION OF PRIVATE LIMITED COMPANY TO PUBLIC COMPANY 
1. Raising capital through public issue of shares
The ability to raise shares is the most beneficial factor of a public limited company. Especially, if it is listed on a recognized stock exchange market, it has the ability to attract investors from hedge funds, mutual funds etc. The amount of capital that can be raised is much greater than a private limited company.

2. Brand Awareness
When the company goes public, it gets listed in the stock exchange and hence automatically more people get to know about and its functions, hence the increased brand recognition will bring more business.

3. Limited liability
The liability of each shareholder or member is limited. This characteristic remains intact with this conversion. Their liability is limited to the extent of their shareholding. The individual or personal assets of shareholders or members are not at risk.

4. Transferability of shares
Shares in a public limited company are easily transferable as compared to the private limited company. The shareholders can sell the shares and benefit from its liquidity. This acts as an incentive for people to invest as they are not bound to remain with the company forever.

REQUIREMENTS FOR THE CONVERSION OF PRIVATE LIMITED COMPANY TO PUBLIC COMPANY
1. To hold Board meeting for conversion of a Public Company into a Private Company.
2. Name clause of Memorandum needs to be amended to exclude the word ‘Private’.
3. Alteration of memorandum and articles of the company as per the Companies Act Provisions. [Section 18(1)]
4. Make an application to the Registrar for the conversion of a Private Company into a Public Company. [Section 18(2)]
5. For effecting conversion of Private Company into Public Company, file an application in E-Form INC-27 with the Registrar along with prescribed fees within fifteen days of passing of Special Resolution along with the following attachments
- Minutes of the Members’ Meeting
- Certified True Copy of Special Resolution
- Altered Memorandum of Association
- Altered Articles of Association
- Any other documents, as required.
6. File Form MGT-14 with the Registrar of Companies within 30 days of passing the Special resolution in the General Meeting, , along with following documents as an attachment:
i. Certified True Copies of the Special Resolutions along with explanatory statement
ii. Copy of the Notice of meeting sent to members along with all the annexure
iii. A printed copy of the Memorandum of Association and Article of Association
iv. Copy of Attendance Sheet of General Meeting
v. Shorter Notice Consent, if any.
7. To hold the General Meeting and passing the required resolution for the conversion of a Private Company into a Public Company.
8. Where the company to be formed is to be a public company have at least 7 members. [Section 3(1)(a)]
9. The number of Directors should be increased to at least 3. [Section 149(1)(a)]
10. If required, increase the Authorized Share Capital and Paid up Share Capital as prescribed for Public Company.
11. Conversion of the company shall not be allowed to a company which has not filed annual returns or financial statements due for filing with the Registrar or which has failed to pay or repay matured deposits or debentures or interest thereon. [Rule 29(1) of Companies (Incorporation) Rules, 2014]
12. on the approval of E-Form MGT-14 and E-Form INC-27, Registrar will issue a fresh Certificate of Incorporation with the Changed name.