The Process of Converting Your Private Company to a Public Limited Company

In today’s economic cycle, running a business on a large scale necessitates forming an organisation capable of protecting the interests of the governing board and stakeholders. As we all know the most prevalent kind of business structure nowadays is a “Company” whether Private or Public.

When a private limited business converts to a public limited company, it becomes accessible to the general public. This allows the company to raise capital by issuing shares to a wider number of investors. As a result, the company is able to expand its operations, start new initiatives, and purchase other businesses with more financial resources. Overall, this move represents a huge step forward in terms of development and advancement, with numerous potential for expansion.

Understanding the Concept of a Public Limited Company

A public limited company is a business that sells shares to the general public to raise capital from a diverse group of investors. Unlike a private company, which has restrictions on share transferability, a public limited company’s shares can be freely traded on the stock exchange. It is critical to understand the legal and financial implications of becoming a public limited company before proceeding with the conversion.

Before beginning the conversion process, assessing the company’s readiness for the transition is critical. Examine the company’s financial stability, growth potential, and market position. It is vital to ensure that the company’s operations, management structure, and financial reporting meet the requirements of a public limited company.

PRIVATE LIMITED COMPANY	PUBLIC LIMITED COMPANY
Owned by a few individuals or a close group of shareholders	Owned by a large number of shareholders
Restricted and requires shareholder consent	Shares can be freely traded on the stock exchange
Raised through contributions from shareholders or loans	Can raise capital from the general public through IPOs
Fewer disclosure requirements	Subject to stricter disclosure requirements
Offers more privacy and confidentiality	Subject to public scrutiny

It is far easier to start and operate a private corporation than a public one. However, certain privileges are reserved exclusively for public corporations. 

Initially, investors form a private company under the Companies Act and later convert it to a public company to gain privileges such as increasing the number of members to over 200, accepting public funds, and transferring shares without restrictions. 

As a result, expansion and flexibility are perfect reasons for switching from private to public.

STEP-BY-STEP PROCESS FOR CONVERTING A PRIVATE LIMITED COMPANY TO A PUBLIC LIMITED COMPANY

STEP 1:

Conduct a Board Meeting to pass a Board Resolution for the approval of the Notice of General Meeting, Conversion, and the amendment of the MOA and AOA.

STEP 2:

Conduct a general meeting and pass a special resolution for the conversion, alteration of the MOA and AOA, and name change of the firm (remove the word “Private”).

STEP 3:

File an E-Form MGT-14 within 30 days of the passing of the Special Resolution with the accompanying attachments:

1. Notice of General Meeting and copy of Special Resolution
2. Altered MOA
3. Altered AOA

STEP 4:

File an E-Form INC-27 for the conversion of a private to a public company within 15 days of the passage of the Special Resolution, along with the necessary attachments: 

1.  Notice of General Meeting and copy of Special Resolution 
2.  Changed MOA  Altered AOA 
3.  Details of Director, Promoter, and Subscribers
4. . Minutes from the General Meeting

Following the clearance of both of the foregoing forms, the Company’s CIN number will be changed by replacing the word “PTC” with “PLC”.

POST CONVERSION REQUIREMENTS

1. A Fresh PAN card has to be applied for 
2.  All Business letterheads and related stationery should be updated with the company’s new name 
3. The bank account details of the company should be updated 
4.  Intimation to concerned authorities to be given 
5.  Printing of copies of New MOA and AOA