private-to-public-limited-company

PRIVATE TO PUBLIC LIMITED COMPANY IN INDIA 2022

DEFINITION

PRIVATE LIMITED COMPANY

A private limited company in india is an ideal entity for small businesses. The liability of all the individuals of a private limited company gets restricted to the number of shares they hold in the company. The shares of a private limited company can never be traded.

PUBLIC LIMITED COMPANY 2022

A public limited company in inida is one where the shares are traded on a public/private stock exchange. These shares can be purchased and traded by anyone. A public limited company that offers company shares to the general public. The Company’s Act 2013, defines a public limited company as one that has limited liability and offers shares of the company to the public. Any individual can buy the stocks of a public limited company either through stock-market trading or via Initial Public Offerings (IPO).

THE BENEFITS OF A PUBLIC LIMITED COMPANY

1) QUICK TRANSFER OF SHARES

A shareholder of a public limited company can easily transfer their shares to someone else. All one needs to do is file the share transfer form and hand over this certificate to the buyer. However, the process of transferring a share to another business entity is very tedious.

2) TO RAISE CAPITAL

The advantage of a public limited company is that you can leverage it to raise capital from the general public through shares. This would, however, require listing on a stock exchange. All public limited companies can issue fixed deposits, debentures, convertible debentures to the general public.

3) MORE CREDIBILITY

Public limited companies need to disclose their audited statement of accounts, inform the regulatory bodies of any structural change, and hold annual general body meetings for all shareholders. These compliance procedures bring a great deal of credibility to the organization.

REQUIREMENTS FOR CONVERSION TO A PRIVATE LIMITED COMPANY

  • Digital Signature Certificate (DSC)and Director Identification Number (DIN) of two directors.
  • Preparation of MOA (Memorandum of Association) and AOA (Articles of Association).
  • Permanent Account Number (PAN) and Tax Deduction and Collection Account Number (TAN) card.
  • The name search, application and name reservation.
  • Certificate of Incorporation (CIN).

PROCESS OF CONVERTING A PRIVATE LIMITED COMPANY TO A PUBLIC LIMITED COMPANY

A company already enrolled as a private limited company by modification of memorandum and articles of the company can convert to a public limited company. An application is needed to be sent to the registrar. The registrar once convinced that all the steps have been taken shall shut the former registration of the company. After the registration process related to the conversion is complete, the Registrar issues a certificate of incorporation. The transformation of a company does not assume any debt, claim, liabilities, and obligations. Any previous debt/liabilities/contracts may be carried forward and executed as before.

CALLING A BOARD MEETING

Notices have to be issued according to the provisions of section 173(3) of the Companies Act, 2013, for the conversion of a meeting of the Board of Directors. The main objective of this board meeting is for the following points:

  • A board resolution has to be passed to get the principal permission of directors for the conversion from a public limited company to a public company by modifying the Articles of Association (AOA)
  • One needs to get the approval of shareholders, fix the date, time and place for holding an Extra-ordinary General meeting (EGM), by way of a special resolution to convert a private limited company into a public limited company.
  • Which approves the notice of EGM with agenda and statement to be added to the notice of the general meeting, as per the norms in section 102(1) of the Companies Act, 2013.
  • To delegate a director or company secretary to issue the notice of the extra-ordinary General meeting (EGM) as recommended by the board under article 1(c) mentioned in the above point.
  • To pass a board resolution to increase the number of directors up to 3, if the number of directors has been less than 3.
  • To issue a notice of the Extraordinary General Meeting (EGM) to all the members and affiliates/directors/auditors of the company as per the requirements of Section 101 of the Companies Act, 2013.

HOLDING AN EGM MEETING:

The company holds the Extra-ordinary General meeting on the due date, and then transfers the required special resolution, to obtain the shareholder’s support to covert the said private company into a public limited company along with the alteration in articles of the agreement, under section 14.

THE REGISTRAR OF COMPANY(ROC) FILING: 

Few E-forms have to be submitted and registered with the concerned Registrar of companies at different stages to convert a private limited company to a public limited company. Those details are mentioned below:

  • An E-form for the filing of a special resolution with ROC, which is passed to convert a private limited company into a public limited company.
  • In the case of an altreation in Article of Association which is needed to convert it to a public company special resolution, this needs to be passed under section 14. According to section 117(3)(a), a copy of this special resolution must be filed with the concerned ROC through the filing of form MGT.14 within 30 days of passing the resolution in the EGM.
  • According to Rule 33 of Companies (Incorporation) Rules,2014, to convert a private company into a public company, the application must be listed in Form No.INC-27 with the fee. Moreover, the conversion of the company must be registered in e-Form INC.27 to the ROC involved, with all the requisite annexures and prescribed fee.
  • As per section 18, after receiving the documents to convert a private limited company into a public limited company, the ROC must convince itself that the said company complies with all the necessary provisions to register a company. If it is convinced the ROC (Registrar of Companies) will enclose the previous registration and issue a fresh certificate of incorporation, after it has registered the documents presented for change under the specific class of the said company.

DOCUMENTS NEEDED TO CONVERT A PRIVATE LIMITED COMPANY INTO A PUBLIC LIMITED COMPANY

  • The copy of the directors’ PAN card
  • Passport size photographs of all the directors
  • A copy of the Aadhar card or voter ID
  • The copy of the rental agreement
  • The electricity or water bill of the registered business premise
  • The copy of the property papers if it is owned by self
  • The landlord No Objection Certificate (NOC) to provide the format.

Our team of tax and legal experts at ACE ALLIANCE will help you convert your private limited company to a public limited company. Our team will help you to modify the articles of association, delete the word private from your said company name. Our team will assist you in filing your application along with the necessary documents and will also help you with all the post-conversion formalities and compliances.