Conversion of Private Company into Public Company

Running a private Limited Company has its own benefits and limitations as well. When a brand decides to go huge, then having a Public company comes as a first thought in the managements mind. You will feel why ? Let me tell you with the following examples :-

1) A Private Company has a limitation of having only 200 members, where as there is no limit on number of members in a public Company.

2) Offer the option of Initial Public Offering (IPO). Here, by going public, the company is offering its shares to the general public.

The option of IPO thereby removes the restriction on the transferability of shares, which is a feature of private limited companies.

There is no cap with regards to the maximum number of members in a public limited company, thereby allowing them to raise and gain easy access to funding. Therefore, growth and flexibility are ideally the reasons for the switch from private to public.

Procedure for Conversion of Private Company into Public Company

1. Board resolution for approval for conversion and alteration of memorandum & article of association

2. Special resolution for approval for conversion and alteration of memorandum & articles of association and change of name to delete word “Private”

3. eForm MGT-14 for filing the resolution with Registrar within 30 days of passing special resolution alongwith:

(a) Special resolution

(b) Notice & explanatory statement

(c) Altered memorandum & articles of association

4. eForm INC.27 for application for conversion of company with ROC within 15 days of passing of special resolution along with:

(a) Special resolution

(b) Minutes of members’ meeting

(c) Altered articles of associationx

5. Compliance of provisions applicable on public companies like appointment of addtional no. of Directors and increase in no. of members.

The article has been prepared considering the relevant Guidelines/ Circulars/ Notifications/ Provisions of the Companies Act, 2013, the rules made there under & The Companies Act, 2013. Readers are requested to cross-check the provisions before acting upon the same. The author will not be liable for any damages or penalties caused.

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About Author:- Author Sagar Kapoor is a Practicing Company Secretary at Delhi. Founder of Sagar Kapoor & Associates, The author has core knowledge in Company Law matters specially. You can get in touch with me at CSsagarkapoor@gmail.com.