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Conversion of a private limited company to a public limited company

Conversion of a private limited company to a public limited company

Private companies are conferred with several privileges and exemptions under the Companies Act, 1956. For example: it does not need to hold a statutory meeting, there is no restriction on managerial remuneration and it does not require a certificate of commencement to begin its business.

When such advantages are available for private companies why would one want to convert to a public company?

The obvious answer would be that when these advantages become a limiting factor for the growth of the business, it is sensible to convert.

A public company has no restriction on the maximum number of its members (the limit is 200 in a private company) and the biggest advantage of them all is the option to trade shares on a stock exchange to raise more capital.

The procedure of Converting a Private Company into a Public Company 

1. A resolution needs to be passed in a board meeting approving the conversion of the company from a private limited to a public limited.

2. The minimum paid up capital of the company needs to be increased from Rs 1 lakh to Rs. 5 lakh.

3. A special resolution is to be passed in a general meeting with the shareholders for the amendment of the name clause in the Memorandum of Association and removal of restrictive provisions in the Articles of Association.

4. Application to the Registrar of Companies with the following:

a. Form No. 23 which is for the registration of resolutions. This requires basic information about when the resolution was passed and the purpose for the same.

b. A prospectus or a statement in lieu of prospectus needs to be filed which describes the business of the company, its performance, investment strategies and the company’s performance.

5. A certificate of commencement is required in order to start business as a public limited company.

Convert a Private Company into a Public Company Now!

Though public companies are subjected to more scrutiny under the Companies Act they serve as better corporate vehicle for an expanding business.

Convert a Pvt Ltd Company into a Public Company Now!

You can fill up the simple form on this page to learn more about conversion of a Private Limited Company to a Public Limited Company!Our team will send you an email instantly and follow that up with a 1-to-1 call, if required.