Conversion of a private limited company into public limited company
While a private entity is a corporate entity and enjoys the advantages of a registered corporation, the transformation of a private entity into a public entity has its motives, meaning and ultimately varies.
What are the advantages of converting private company into public company:
- The only corporate form that enjoys the inflow of public investment by issuing securities to the general public.
- Public business collects money from the general public and makes use of such money to carry out its activities.
- Shareholders who invest in public companies want something more like ' give and take ' thought in exchange for their investment.
- Public limited companies enjoy better acceptance of the market and offer investors trust.
What is are the steps to Convert Private Limited Company into private limited company?
- Director's approvals are required for conversion in the Board Meeting.
- Member's approvals are required for conversion in the General Meeting.
- Prescribed forms are required to be filed with Registrar of the Company (ROC).
- After the above procedure, Fresh certificate shall be issued by the Registrar of the Company (ROC).
What are the requirements for conversion of private company into public company?
Below mentioned requirements are required to be complied with for converting the Private Limited Company into Public Limited Company:
- There is a requirement of adaptation of new Articles of Association (AOA) and Memorandum of Association (MOA) after conversion of Private Limited Company into Public Limited Company.
- Share capital is required to be increased and must be Rs. 5, 00,000/-
- There is a requirement of minimum 3 directors in case of public company.
- Director Identification Number (DIN) shall be allotted to both the directors of private company.
- There is a requirement of minimum 7 shareholders in a case of public company.
- The transition time is 15-20 days, and it also depends on the applicant's documentation and the government's speed of approval.