Conversion of Private To Public Company

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  • Conversion of Private Limited Company Into Public Company

Overview

  • Private company has some restricted rights as compared to a public company in regards to issue of capital, Turnover, taking deposits, having members etc.
  • In order to expand and take benefits of global exposures and expand uncontrollably, private limited company needs to be converted into public limited company.
  • Along with the extended right some extra compliances and regulation do accompany with conversion of private company to public company.
Overview
Procedure

Procedure for Conversion of Private to Public Company

  • CONDUCT BOARD MEETING - To conduct a board Meeting to discuss the following agenda:
    • Fixing time, date and venue of holding EGM.
    • Approve of conversion to public limited company ,adopting new set of MOA & AOA subject to the approval of shareholders.
    Note: The notice of board meeting to be circulated at least 7 days before the meeting to of all the Directors at their registered address.
  • CONVENE GENERAL MEETING -
    • An Extra Ordinary General Meeting is to be conducted for passing special resolutions for the purpose of alteration in MOA and AOA & to get approval of shareholders for conversion of the private limited company into public limited company.
    • Amending the name clause in MOA and substitute from "Private Limited" to "Public Limited/Limited" wherever used.
    • All the restrictions and limitations applicable on Private Company has to be altered from Articles of Association of Company.
    • Make ensure the limit of number of Director to be three & number of members in Company is seven before to conversion.
    • Ensure Company has completed filing of annual returns or financial statements due with the Registrar of companies.
    • Note: 21 days clear notice of EGM is required be send to the members, Directors and Auditors of the Company. However, General Meeting can also be hold at a shorter notice with the consent of more than 95% of shareholders entitled to vote.
  • FILING OF E FORM MGT-14 - MGT-14 is to be filed with ROC within 30 days from the date of passing of special resolution in the EGM with the following attachment:
    • Notice of calling EGM
    • CTC of Special Resolution
    • Altered MOA and AOA
    • CTC of Board Resolution as an optional attachment.
  • FILLING OF E FORM INC-27 - Company is required to file INC-27 within 15 days of passing Special Resolution with Registrar of Companies with following attachments:
    • Minutes of the EGM of the Members
    • CTC of Special Resolution
    • Altered MOA and AOA
    • Order of Condonation of Delay (if any)
    • List of all members in the Company with all the required details
    Note: INC-27 is required to filed after filing and approval of Form MGT-14 as SRN of Form MGT-14 is needed to fill in Form INC-27.
  • FRESH CERTIFICATE OF INCORPORATION - On being satisfied with above filing of E- Form MGT -14 and INC-27, ROC shall issue a fresh certificate of incorporation of company with changed name and close up with former registration of Company.

Documents Required for Conversion of Pvt. Into Public Company

  • PAN card and Aadhar card of directors and shareholders are mandatory.
  • ID Proof: Self attested Passport / Voter-ID / Driving License (any one)
  • Address Proof: Self attested Latest Electricity Bill / Telephone Bill / Mobile Bill / Bank Statement with latest entries (any one)
  • Email and contact details of each director
  • Certificate of Incorporation
  • Digital Signature Certificate (DSC) of all Directors
  • Passport size Photograph of Directors
Documents Required
Forms to be Filed

Forms to be Filed

  • Copy of Special Resolution-MGT-14
  • Conversion of Company-INC-27

Key Points for Consideration of Conversion of Pvt. To Public Company

  • Company has not failed to pay or repay matured deposits or debentures or interest thereon.
  • Company has to arrange new stationary and letter heads, amended set of Memorandum of Association and Article of Association Post conversion .
  • An application will be made for change in PAN of Company and update bank account details of the company.
  • The Intimation should be given to Government Departments where Company is registered or any other concerned authority like Excise and sales tax/GST and others about the status change.
Key Points
Features

Features that Differentiate a Public Company from a Pvt. Ltd. Company

  • The listing public limited company is on a recognized stock exchange and the stocks are traded publicly whereas in a private limited company is not listed on the stock exchange and ot traded as it is held by its members only privately.
  • Public companies are compulsorily required to call a statutory general meeting of members and in case of a private company there is no such compulsion.
  • The issue of prospectus or statement is mandatory with public company whereas it is not applicable in the case of a private company.
  • The shareholders of a public company can transfer their shares freely but such transferability of shares is restricted completely in private limited company.
  • The owners of the public company can raise capital from the general public but private limited company can’t.
  • There is heavy compliance burden to match with the regulations provided by SEBI on a public limited company whereas in case of private limited company compliances are less.
  • Appointment of company secretary is mandatory for public companies and in case of private companies, it is optional and discretionary.
  • There is no restriction for Managerial remuneration to Directors whereas in case of private limited company, it can’t exceed 11% of the net profit.
  • The Quorum at AGM is 5 members in case of public limited company and in private limited company, it is 2 members.
  • Depending on requirement, a type of company is chosen to be register. However, the main reason for selecting a public company is to enjoy the ability to offer shares to the public and raising of funds from the public.

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