Benefits of Conversion of Private Limited to Public Limited Company in India

There are several reasons why a private limited company may want to convert to a public company.

Some of the common reasons include:

• Access to a larger pool of capital: A public company has the ability to raise funds through the sale of shares, which can be beneficial for a company that is looking to expand or invest in new projects.
• Improved credibility: Being a publicly traded company can enhance the credibility and reputation of a business, as it is subject to greater scrutiny and transparency.
• Enhanced valuations: Public companies tend to have higher valuations than private companies, as they are more liquid and have a larger number of shareholders.
• Greater visibility: Being a publicly traded company can increase the visibility of a business, which can lead to increased brand recognition and customer loyalty.

Documents Required for the Conversion of Private Limited to Public Limited Company in India

To facilitate the conversion, several documents must be prepared, including:

• Digital Signature Certificates (DSC) for all directors.
• Director Identification Numbers (DIN) for all directors.
• Identity and address proof for directors.
• Recent passport-sized photographs.
• Proof of business address (either ownership documents or rental agreements).
• Latest financial statements and income tax return acknowledgments.

Process for the Conversion of Private Limited Company to Public Limited Company

The process of converting a private limited company to a public company involves the following steps:

1. Pass a Board resolution:

The first step in the conversion process is to call a Board meeting for conversion and alteration of memorandum & article of association (MoA and AoA) The MOA and AOA of the private limited company must be amended to reflect the change in status from a private limited company to a public company. This includes changing the name of the company to include the words "Limited" or "Private Limited" to "Public Limited Company."

2. Pass a special resolution:

The resolution is passed by the shareholders and approval of the shareholders of the private limited company is obtained for such conversion. This resolution must be passed at a general meeting of the shareholders, and it must be approved by at least three-fourths of the shareholders present and voting, the quorum should be present throughout the general meeting, it can be an extra-ordinary general meeting duly held per the notice.

3. File a e-form MGT-14 with Registrar of Companies (ROC):

After the special resolution has been passed, a copy of the special resolution with the copy of explanatory statement must be filed with the ROC in e-form MGT-14 in addition to copy of altered memorandum and articles of association (MoA and AoA). This can be done through the Ministry of Corporate Affairs' (MCA) e-filing portal.

4. Obtain No Objection certificate from the concerned authorities:

In order to convert into a public company, the private limited company must obtain a NOC from the relevant authorities. This may include the Reserve Bank of India (RBI), the Securities and Exchange Board of India (SEBI), and any other regulatory bodies that the company is subject to.

5. File e-form INC 27 with the ROC:

The e-form INC-27 application shall be made with ROC within 15 days from passing the special resolution through the MCA's e-filing portal. The final step in the conversion process is to file the necessary documents, including the amended memorandum of association, articles of association, and prospectus, with the Ministry of Corporate Affairs.

6. Issue a prospectus:

A prospectus is a document that provides information about the company and its financials, as well as the terms and conditions of the sale of shares. A prospectus must be issued when a private limited company converts to a public company and intends to sell shares to the public.

7. Obtain a certificate of incorporation as a public limited company:

Once all of the above steps have been completed, the private limited company can apply for a certificate of incorporation as a public limited company. This certificate will be issued by the ROC once all of the required documents have been filed and the conversion process is complete.

It is important to note that the conversion of a private limited company to a public company is a complex process and requires the assistance of legal and financial professionals. It is also important to ensure that all necessary documents and requirements are properly filed and fulfilled in order to avoid any legal issues or delays.

While the process can be complex, it can also bring numerous benefits, including access to a larger pool of capital, improved credibility, enhanced valuations, and greater visibility.

Post-Conversion Steps

Once the company has officially converted to a public limited entity, there are additional steps to complete:

• Apply for a new PAN card reflecting the company’s public status.
• Update all business stationery with the new company name.
• Revise bank account details to align with the public limited company designation.
• Inform tax authorities and other relevant stakeholders about the change.
• Print updated versions of the new MOA and AOA.