Conversion of Private Limited Company into Public Limited Company

Conversion Process, Legal Formalities and ROC Compliances, Documents, expenses
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A company already registered as a Private Limited may convert voluntarily into Public Limited Company by altering memorandum and articles of the company and increasing Members to 7 and minimum no. of directors to 3. 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 An application in this regard is required to be made to Registrar. The Registrar after being satisfied that all provisions have been complied with, shall approve the conversion and issue Certificate of Incorporation. The conversion of a company shall not affect any debt, liabilities and obligations. Such debt, liabilities, obligation and contracts may be enforced as if there is no such conversion.

Foremost condition for conversion is

Call Board Meeting
Step 1, call Board Meeting to fix the date, time and place for holding Extra-ordinary General meeting (EGM) to get approval of shareholders, by way of Special Resolution, for conversion of a Private company into a Public company.

Call EGM
Hold the Extra-ordinary General meeting (EGM) on due date and pass the necessary Special Resolution, to get shareholders’ approval for Conversion of Private Company into a Public company along with alteration in articles of association under section 14 for such conversion.

ROC Filing
Form MGT 14 and INC 27 is required to file as per below:- A) MGT 14 - a copy of this special resolution is expected to be filed with the concerned ROC through the filing of form MGT.14 within 30 days of passing the resolution in the EGM. B) INC 27 - As per Rule 33 of Companies (Incorporation) Rules, 2014, for effecting the conversion of a private company into a public company or vice versa, the application shall be filed in Form No. INC-27 with fee. Accordingly an Application for conversion of a Private company into a Public company is required to be filed in e-Form INC.27 to the ROC concerned, with all the necessary annexures and with prescribed fee.

Acceptance
As per Section 18, after receiving the documents for conversion of a Private Company into a Public Company, ROC shall satisfy itself that the Company has complied with the requisite provisions for registration of the company. If so satisfied, ROC (Registrar of Companies) shall close the former registration and issue a fresh certificate of incorporation, after registering the documents submitted for change in class of company.

Minimum 7 Shareholders
Minimum 3 Directors
No pending forms approval at ROC at the time of conversion

• Intimate all the concerned authorities viz. GST, Custom, etc about the status
• Update company bank account details
• Analyse your newly adopted AOA and MOA and remove all things which are in contradiction with the conditions of AOA or irrelevant
• Change new name in PAN/TAN and all other documents
• Increase Number of Directors to minimum 3 Directors
• Increase number of Members to minimum 7 members

A public limited company is a type of company that offers the public to subscribe for its shares thus providing flexibility in transfer of shares

• Easy to Raise Capital -> Raising capital is much easier for a public limited company through public subscription as well as stock market (if listed)
• Lower risk -> As the number of shareholders is quite large, the risk borne by each shareholder is considerably low.
• Limited Liability -> Directors and Shareholders have no personal liabilities. Limited Liability protects the personal wealth of the shareholders and directors therefore owners will never lose more that they have invested.
• Brand Recognition-> A public company can get its shares listed in a stock exchange therefore; people will be able to easily and quickly recognize the brand or name of the company. The more brand recognition a company has, the more business it will have.
• Democratic Management -> Management of the company is not confined to few persons. Shareholders have powers to elect and remove directors and they can exercise control over management in general meetings of the company.