PRIVATE LIMITED COMPANY TO A PUBLIC LIMITED COMPANY
A public limited company is the only form of corporate organization that can raise funds from the public. It can borrow funds more freely, as it has more sources of funding. It can accept deposits from the public, issue secured and unsecured debentures etc. Financial institutions and banks are more open to lending money and assets to public companies than private companies, because they are protected to a certain extent
Public limited companies have more resources for recognition as well. They are better accepted in the market, and the stakeholders are more confident of the success when compared to Private Limited companies.
When a business reaches the limits of what it can do as a private limited company, it is the time to convert it into public limited company. It opens up the gates to additional financial resources. SunShine Corporate Solutions helps businesses with all the documentation, legal work and other procedures required for conversion of private limited company to public limited company.
Requirements for conversion of private limited company to public limited company:
There is a minimum set of requirements for conversion of private limited company to public limited company. They are as follows:
• There should be at least 7 shareholders at the time of conversion of private limited company
• There should be at least 3 directors of the company at the time of conversion
• One person can be both a shareholder and a director of a company
• If the above requirements cannot be fulfilled by the private limited company, then it has to make the necessary alterations and changes before going through conversion
• All the directors of the private company should have a Director Identification Number (DIN)
• At least one director of the company should have a Digital Signature Certificate (DSC)
Steps Involved in Conversion of Private Limited Company to Public Limited Company According to Section 14 of the Companies Act 2013, a private Limited company may by a Special Resolution alter its Articles of Association in a manner to remove the restrictions and limitations applicable to a private Limited Company and the company shall from the date of such alteration cease to be a Private Limited Company.
The mandatory procedures to be followed for Conversion of Private Limited Company to Public Limited Company
1 Board meeting: The Board of directors to meet and pass a resolution for approving the proposal for Conversion of Private Limited Company to Public Limited Company and to call General Meeting of the shareholders for approval of conversion and to delete such restrictions and limitations from the Articles of Association of the Private Limited Company.
2 Notice of General Meeting: Board has to fix the date, time and venue for holding meeting of the shareholders for obtaining approval for Conversion of Private Limited Company to Public Limited Company. Shareholders should be given a clear notice of at least 21 days for the General meeting. Notice of meeting should contain texts of the special resolution and explanatory statement pursuant to section 102 of the Companies, Act 2013.
3 Filing of Special Resolution with RoC: After the resolutions for conversion into public limited company, change of name of the company and alteration of Memorandum of Association has been approved by the shareholders, the company should file required Form within 30 days along with the certified copies of Special resolution, the explanatory statement annexed to the notice of general meeting, and copies of amended Memorandum and Articles of Association along with prescribed filing fees. The Articles of Association of the company shall be altered in such a manner that they would contain all provision which is required to be contained in the Articles of a Public company and remove all restrictions and provisions which are inconsistent with the requirements of a public company.
4 Prospectus: The Company then files a prospectus. The form relevant to the prospectus is to be filed. The form should be accompanied with the following attachments:
b. Letter of Application to the Registrar for fresh Certificate of Incorporation
c. Consent letter of the Auditor for inclusion of his name in the SLP
The company has to surrender the original Certificate of incorporation and obtain Fresh Certificate of Incorporation and Certificate of commencement of Business from the Registrar of Companies. The company has to issue general notice in newspaper informing public that it has been converted to a public limited company and that its name has been changed from “…………………. Private Limited’ to “………………………….. Limited’ with effective date.
Conversion of private limited company into a public company is a time consuming process ,which involves mandatory procedures. You can expedite the process by outsourcing it to SunShine Corporate Solutions. We have experts to handle every aspect of conversion of business including legal, financial and corporate procedures. Please contact us to learn more about the best solutions for the conversion of your company. We will ensure that your operations run smoothly during the transition to a public company.