Converting Private Limited Company to Public Company
In today’s business world, companies usually need to adapt to changing market scenarios to grow and attain more opportunities. One type of conversion is known as the transformation of a private company into a public company. The Companies Act, 2013 is applicable in order for this conversion to take place. This act provides a legal structure for drafting the procedures, requirements, and consequences involved.
What do you mean by Public Limited Company?
As per the Companies Act 2013, a public company lets the general public sign up for the share capital to lift its funds. This request is to assist by distributing a prospectus, followed by the distribution of the shares. Public companies enable their shareholders to exchange their shares without rigorous limitations. These companies enlisted their shares on the stock market, where all the trading takes place with the help of brokers.
What do you mean by Private Limited Company?
Private companies do not allow the general public to subscribe for their shares on stock markets, in contrast to public companies. As an alternative, these transactions are held privately or over the counter. These companies also restrict their members from shifting shares.
The conversion from a private company to a public company provides plenty of funding possibilities. When a privately held company makes this alteration, all the securities become public-owned and can get listed on a stock exchange.
What factors lead a company that is privately held to go public?
The decision to change from a private to a public company was taken because of some reasons that are given below:
Boosting Capital
Through Initial Public Offerings (IPO’s) public companies get the advantage to access wide pool of investors and funds by distributing shares. This growth of capital will result in expansion of business, decreasing debt and funding for new initiatives.
Elevating Valuation
Due to the broad market recognition and capability for liquidity, a public company’s valuation is frequently higher than that of a private company. This transition results in boosting the overall worth and desirability of the business.
Exit Strategy
Changing to a public company provides a way for existing shareholders to sell their shares and attain the value of their investment. This process outlines a possible exit strategy for those looking to convert their holdings into cash and gain financial benefit from their ownership investment.
Growing Transparency and Governance
Following the strict rules and regulations is mandatory, as they are closely monitored by the regulators. This strict policy will result in building confidence and trust among investors.
Required Documents
The required documents listed below are in accordance with the Companies Act of 2013:
- PAN Card details of Shareholders’
- A copy of the foreign national’s passport if the shareholder is an international citizen.
- For shareholders and directors, the necessary identity credentials are PAN, Aadhaar Card, and Voter ID.
- Utility bills, such as those for power and water
- A certificate of no objection (NOC) from the person in charge of the registered office
- The lease and other registered office paperwork
- All documents must have the proper government’s notarization if the person is a foreign national.
- The MOA and AOA
- A duplicate of the Certificate of Incorporation for the firm
- Income Tax Returns of the Company
- The company’s latest audited financial statements
We provide Custom Solutions for your legal problemns
Contact us
Security, Confidente & Reliable Solutions
Contact us
Calculate all your liabilites and pay as well
Contact us
Mandatory Forms for the conversion of Private Limited Company into Public Limited Company
Below are the forms required for the transition from a private limited company to a public company:
Form MGT 14: Form MGT 14 is mandatory to be delivered to the Registrar of Companies with the notice of the EGM (Extraordinary General Meeting), an altered AOA, and statements with clarifications and resolutions acquired at the EGM.
Form INC 27: It is necessary to submit Form INC 27 to the Registrar of Companies. The notice of the EGM, updated AOA, amended MOA, statements with justifications, and resolutions approved at the EGM must also be sent to the ROC in addition to this material. The meeting minutes must be sent to the ROC as well.
Conclusion
When a private limited company becomes a public company, it gets a lot of benefits, such as more cash through initial public offerings (IPOs), a higher valuation, and better control and transparency. Following the steps in the Companies Act, 2013 is important, and you’ll need to send in certain papers and forms, like information from your PAN card, a Memorandum of Association (MOA), an offer letter (AOA), and Forms MGT 14 and INC 27. In the end, this change gives the business more ways to get money and a better name in the market.
Expert guidance
Dedicated team
Client satisfaction
Ongoing support
Transparent processes
FAQ’s
Anyone can invest since the company allows the general public to purchase shares. On the stock market, shares are exchanged.
It’s a company where shares aren’t for the public. Only private deals, no stock market action.
More capital from IPOs, higher value, easy exit for shareholders, and better transparency.
More capital from IPOs, higher value, easy exit for shareholders, and better transparency.
A form for the Registrar of Companies with EGM notice, updated AOA, and resolutions.
Another form for the Registrar with EGM notice, updated AOA and MOA, reasons, resolutions, and meeting minutes.
Public companies can get funds from many investors through IPOs, helping grow the business and cut debt.
Stricter rules mean more trust and confidence from investors.