Have you been thinking about converting your Pvt ltd company to public limited company (PLC) but don’t know where to begin? Well, you have come to the right place!
Converting to a public limited structure opens up tremendous growth opportunities through access to public capital, increased credibility, and prestige. However, it also requires meeting several regulatory compliance norms.
This comprehensive guide from India’s top experts at Filingwala.com takes you through the entire private to public company conversion process step-by-step. Read on to fully understand eligibility, documents required, procedure and costs involved.
Table of Contents
- Private Ltd vs Public Ltd Company
- Benefits of Becoming a Public Company
- Checklist of Requirements for Conversion
- Post Conversion Requirements
- Step-by-Step Procedure for Conversion
- ROC Forms and Filings Needed
- Documents Required for Conversion Process
- Why Choose Filingwala.com?
- FAQs on Private to Public Conversion
Key Differences Between Private Limited and Public Limited Company
Let’s first briefly understand 6 main differences between a private limited & public limited company:
|Private Limited Company
|Public Limited Company
|Minimum Paid-up Capital
|Trading of Shares
|Not freely transferable
|Freely tradeable on stock exchanges
|Minimum Number of Members
|Number of Directors
|Can’t be listed
|Can be listed for public fundraising
|Lower accountability & disclosure norms
|Higher transparency through accountability
So in summary, a public limited structure makes your company more transparent, accountable and opens doors for accessing larger capital from public investors. But this comes with added responsibilities and compliance overhead.
Key Benefits of Converting to a Public Limited Company
Here are some of the main advantages of converting from a private limited to a public limited company:
1. Ability to Raise Capital through Public Listing
The biggest benefit is that you can now issue IPOs and raise large amounts of capital from public retail and institutional investors. This fresh capital can be used to fuel rapid growth plans.
2. Increased Credibility & Trust
Being a listed entity on the stock exchanges increases visibility and establishes credibility with customers, vendors and the public.
3. Higher Valuations
Listed companies often get higher valuations during acquisitions or investments from private equity/venture capital funds.
4. Improved Corporate Governance
More independent directors on board, oversight by SEBI and accountability to shareholders leads to better corporate governance.
5. Prestige of Being a Listed Company
Having your company name and stock quote listed in the financial pages of newspapers and websites brings huge prestige.
6. Exit Opportunities for Investors
It offers early investors better exit opportunities to cash out through the IPO or by selling their shares later.
Thus, converting to public limited company offers long-term growth opportunities. Now let’s look at exactly what’s needed to undertake this conversion process.
Checklist of Requirements for Private to Public Company Conversion
Here are the key legal requirements and procedural conditions for converting from a private limited into a public limited company:
- Must have minimum 7 members/shareholders
- Minimum paid-up capital of ₹5 lakhs
- Minimum 3 Directors on Board
- No overdue statutory filings or charges
- Special Resolution approval from shareholders
- Alter Memorandum & Articles of Association
- Obtain NOC from creditors/lenders if any
- Consent from Directors, Auditors etc.
- Approval from Regional Director if turnover exceeds thresholds
- Filing with Registrar of Companies (ROC) for name/status change
Additionally, the company directors also need to have valid DIN numbers. So if your private limited company meets all the above criteria, you can proceed to the actual conversion process.
Post Conversion Requirements
After completing the private to public conversion, companies also need to fulfill a few additional formalities:
- Apply for a fresh PAN card
- Update company name on stationery, invoices etc.
- Notify banks and update company details
- Inform sales tax, income tax and other government authorities
- Start complying with listing and public company guidelines
This ensures the transition is smooth for all stakeholders.
Step-by-Step Procedure for Private to Public Company Conversion
The entire conversion process involves 8 key steps which are explained below:
Step 1) Check Eligibility for Conversion
First check if your private company meets all the eligibility criteria outlined earlier in terms of shareholders, paid capital, directors etc.
Step 2) Pass Board and EGM Resolutions
Conduct board meeting to approve conversion. Fix date for shareholder EGM to pass Special Resolution.
Step 3) Make Changes in MOA & AOA
Make necessary alterations to Memorandum & Articles of Association as per public company requirements
Step 4) Obtain NOCs from Lenders
Take No Objection Certificate from banks/financial creditors if your company has any outstanding loans.
Step 5) Seek Creditor, Director etc. Consents
Obtain consent from directors, auditors and major creditors for the proposed conversion.
Step 6) File Forms with ROC
Key forms to be filed with Registrar of Companies for conversion:
- Form MGT-14: Filing of EGM Special Resolution
- Form INC-27: Application for Conversion of Company
Step 7) Issuance of Fresh Certificate of Incorporation
Once satisfied, ROC will issue a fresh Certificate of Incorporation with the new company name and status.
Step 8) Post Conversion Compliances
Complete other formalities outlined in the post-conversion requirements section.
That completes end-to-end private to public limited company conversion process. Quite straightforward, isn’t it?
Now let’s look at some key documents needed for conversion.
Documents Required for Private to Public Conversion
Here are the main documents & information required for converting a private company to public limited:
- Copies of MOA & AOA – Existing Memorandum & Articles of Association
- List of Directors & Shareholders – With PAN card copies
- EGM Notice & Resolution – Containing agenda of conversion
- Audited Financial Statements – Past 3 years audited balance sheets & profit/loss statements
- Digital Signature Certificates – Class 2 or 3 DSC for authorised directors
- Latest Electricity/Water Bill – Related to registered office address as address proof
- NOC from Creditors – No Objection Certificate giving consent for conversion
- List of Assets & Liabilities – Latest statement of assets & liabilities
So make sure you have all the above documents handy before initiating the private to public conversion process.
Now let’s look at why you should choose expert assistance from Filingwala.com for ensuring smooth conversion of your company.
Why Choose Filingwala.com for Your Private to Public Conversion?
Filingwala.com is India’s #1 platform for business and legal services catering to over 1 lakh SMEs and startups. Our dedicated experts provide end-to-end assistance for private to public company conversion including:
1. Complimentary Consultation – Our experts will advise you on the overall conversion process, timelines, documents required etc. so that you are completely prepared.
2. Change MOA & AOA Drafting – We help you make the required changes in MOA & AOA as per public company norms and provide print-ready digitally signed copies.
3. E-Filings & ROC Compliance – Our platform reduces paperwork by helping you with all ROC registrations, eform filings, followups to ensure faster approval.
4. Post Conversion Formalities – Our team assists you with all regulatory updates and stakeholder notifications for seamless changeover into public company.
5. Dedicated Assistance – You get a relationship manager for end-to-end assistance & updates on conversion status without chasing officers.
6. Affordable Pricing – Our fixed pricing means you get the expertise of CA/CS professionals without extra charges for time overruns. Zero hidden costs either.
7. Quick Turnarounds – Our automated platform ensures we deliver most conversion services in just a month!
So forget all that manual paperwork and SC/ST office chasing. Partner with Filingwala.com today to convert your private limited into a public limited company quickly and hassle-free!
Frequently Asked Questions (FAQs)
Below are answers to some common questions about private to public company conversion:
Q. Which section allows private to public company conversion?
A. Section 18 of Companies Act, 2013 governs the voluntary conversion of a private company into a public company.
Q. What’s the minimum authorized capital for public company?
A. Minimum authorized share capital for a public limited company is Rs. 5 lakhs. Minimum paid-up capital also needs to be Rs. 5 lakhs.
Q. What makes a company eligible for getting converted?
A. The private company should meet the eligibility criteria in terms of number of members, directors, authorized capital etc. as per Checklist outlined earlier.
Q. How long does the conversion process take?
A. Complete process takes around 30-45 days including regulatory approvals. Expert assistance can cut down time to 3-4 weeks.
Q. Is name change mandatory during private to public conversion?
A. Yes, the company has to change name to add ‘Limited’ as suffix instead of ‘Private Limited’ after conversion to public company.
We hope this detailed guide helps you understand everything involved in private to public company conversion – eligibility norms, documents required, step-by-step procedure, costs and timelines.
Filingwala.com has simplified incorporations, ROC filings and regulatory compliances for over 1 Lakh businesses so far thanks to our tech-led platform, CA/CS assisted services and affordable pricing.
So if looking for reliable assistance on your company conversion, then contact us today!