Converting Private Limited Company to Public Company
In today’s dynamic business environment, conversion from a private limited company to a public limited company opens doors for expansion, increased valuation, and better access to capital markets. This conversion allows a company to raise funds by offering shares to the public, ensuring transparency, credibility, and regulatory compliance under the Companies Act, 2013.
What do you mean by Public Limited Company?
As per the Companies Act 2013, a public company allows the general public to subscribe to its share capital. These companies raise funds through public offerings by issuing a prospectus, enabling investors to buy shares freely traded on the stock market. Public companies are subject to rigorous regulations and disclosure requirements, enhancing trust and credibility.
What do you mean by Private Limited Company?
Private companies do not allow public share subscription; their shares are privately held and transferred among selected individuals. When such a company converts to a public one, its securities become public, and it can get listed on a stock exchange, broadening investment opportunities and visibility.
What factors lead a company to go public?
- Boosting Capital: IPOs help access a wide pool of investors and funds.
- Elevating Valuation: Public companies often enjoy higher market valuation.
- Exit Strategy: Existing shareholders can liquidate part of their holdings.
- Transparency and Governance: Regular audits and disclosures build investor confidence.
Required Documents
- PAN Card details of shareholders
- Passport copy (for foreign shareholders)
- PAN, Aadhaar Card, and Voter ID for Indian directors/shareholders
- Utility bills (electricity/water) of registered office
- No Objection Certificate (NOC) from the property owner
- Lease/rent agreement and proof of registered office
- MOA and AOA copies
- Certificate of Incorporation (duplicate)
- Income Tax Returns of the company
- Latest audited financial statements
Mandatory Forms for Conversion
Below are the forms required for the conversion process:
- Form MGT-14: Must be filed with the Registrar of Companies along with EGM notice, altered AOA, and approved resolutions.
- Form INC-27: Submitted to the ROC with EGM notice, updated AOA, amended MOA, justifications, and approved resolutions.
Conclusion
Converting a private limited company into a public limited company enhances credibility, access to capital, and transparency. Following the procedures under the Companies Act, 2013 ensures legal compliance and unlocks long-term growth potential for the business.
