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A company already registered in a class may convert itself as a company of another class by alteration of memorandum and articles of the company. Legal Provisions related to Conversion of Private Company into Public Company are given in Section 18 and 14 of the Companies Act, 2013 read with Rule 33 of Companies (Incorporation) Rules, 2014.Section 14 of Companies Act, 2013 plays an important role during the Conversion of Private Limited Company into Public Limited Company. Conversion of Private to Public limited company needs alterations of the articles of association which can be done by passing special resolutions of shareholders in the general meeting.
Shareholders of a public limited company can transfer their shares with great ease. The shareholders can sell the shares and benefit from its liquidity. The process of transferring your share in other business structures is hugely tedious.
The most beneficial factor for a public limited company is the ability to raise capital. If a company is listed on a recognized stock exchange market, it has the ability to attract investors from hedge funds, mutual funds etc. All public limited companies can issue fixed deposits, debentures, convertible debentures to the general public.
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.
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.
The process of conversion starts with calling a board meeting of the Directors. A board resolution is to be passed for the conversion of private limited to public limited and also date, place and time for the EGM is to be fixed.
A special resolution is to be passed to get the approval from the shareholders for the conversion of private limited company to public limited company.
All the necessary and required forms for the conversion of private to public limited company are been filed with ROC.
Once the conversion is completed following points are to be taken care of:
1) Intimate all the concerned authorities like Excise and sales tax etc. about the status change.
2) Arrange new PAN No. of the company. Update company bank account details.
3)Arrange new stationary with new name of the Company.
4) Analyze your newly adopted AOA and MOA and remove all things which are in contradiction with the conditions of AOA.
5) Raise the paid-up capital to minimum Rs. 5 lakhs, if the same is less than Rs. 5 lakhs.
6) Increase Number of Director to minimum 3 Directors.
A public limited company is a company listed on a recognized stock exchange and the stocks are traded publicly. On the other hand, a private limited company is neither listed on the stock exchange nor are they traded. It is privately held by its members only
a)Is eligible to start an OPC company
b) Is eligible to be a nominee for the only member of an OPC Company
Public Company requires at least 7 members.
No, there is no requirement to increase paid up capital.