Formation of a private limited Company has its own sets of advantages and disadvantages. It is seemingly the best form of business when Directors and shareholders are closely held and where the Directors have enough funds to arrange it between themselves or their relatives or acquaintances. However, when the brand has to go really big then later after some point of time, it is preferred to convert your private limited Company into a public limited. In this article, we shall study about the benefits, process and time for conversion of a private Company into a public Company.
Raising of capital through public issue of shares
This is the primary and the major benefit of a public Company that it can raise funds through IPO, Secondary Listing, Debentures by listing the same on exchanges and raising funds thereof.
No restriction on number of shareholders
The maximum number of shareholders in a private limited Company is 200 whereas there is no such limit on number of shareholders in a public limited Company.
When the brand is doing really good then it is generally preferred by the founders and management to go for listing and raise funds from public. This is a great tool for creating brand awareness’ as the particular brands comes under everyone’s notice.
The liability of each shareholder is limited to the amount of shares subscribed by them.
Transferability of shares
The transferability of shares is limited in case of a private limited Company whereas the shares of a public limited Company are easy transferable among the existing shareholders or even new one.
CONVENE A BOARD MEETING:
Issue Notice of Board Meeting to all the Directors of Company at their addresses registered with the Company, at least 7 days before the date of Board Meeting. A shorter notice can be issued in case of urgent business. The following mandatory agendas need to be taken care of:
CONVENE EXTRA ORDINARY GENERAL MEETING:
Notice for convening the General Meeting shall be given at least clear 21 days before the actual date of a General Meeting in writing, or on shorter notice, whatever may be decided by the Board to all the Directors, Members, Auditors of Company, Secretarial Auditor, Debenture Trustees and to others who are entitled to receive the notice of the General Meeting for passing the resolution for conversion of the Company into a public Company and consequently, alteration of memorandum and articles of association thereof.
For effecting conversion of Private Company into Public Company, we need to file an application in e-Form INC-27 with the registrar along with prescribed fees within fifteen days of passing of Special Resolution along with the following attachments: –
FILING OF FORM MGT-14 WITH ROC
File e-Form MGT-14 with the Registrar of Companies within 30 days of passing the special resolution in the General Meeting, along with following documents as an attachment:
On satisfaction, the Registrar shall issue the fresh certification of incorporation.
FREQUENTLY ASKED QUESTIONS (FAQs):
Q.1 Is there any minimum timeline for a private limited to be incorporated to get converted itself into a public limited Company?
There is no minimum time limit mentioned as such in the Act and therefore, if we managements intends, they can convert their private Company into a public one at any point of time.
Q.2 What are the post conversion requirements?
(The author i.e., Kajal Goyal is a Company Secretary in Practice at M/s. Kajal Goyal and Associates and can be reached at (M) +91-9999952595 and (E) email@example.com)