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Overview of Conversion of Pvt. Ltd. to Public Ltd
Private limited companies offer so much by itself, but at some point every private limited company, wishes to turn public so as to enlarge scalability. The question usually put across is: Why to go public? The answer depends on certain distinct difference that occurs between private limited companies and public limited companies which also offer the concept of Initial Public Offering (IPO) and has the concept of shares to the general public. The concept of IPO – Initial Public Offering thereby removes the restriction on that transferability of shares, which is a characteristic of private limited companies. It has been settled that there is no cap in terms to the maximum number of members in any public limited company, thereby permitting them to raise and gain easy access to funding. Consequently, growth and flexibility are preferably the reasons for the changing from private to public.What are the Requirements to Convert Pvt. Ltd. to Public Ltd?
By complying with the following requirements, a Private company can be converted in to public company, which are given bellow:
Alteration of its articles by AOA, thereby deleting the three restrictions of a Pvt. company, as per Section 14 by passing a special resolution.
Altering its name thereby removing the word “Private” from its name, as per Section 13 by passing special resolution.
Moreover, steps should be taken to increase the number of members to at least 7 if the number of members is below 7, and if there are only 2 directors that the number of directors should be increase to at least 3.
The company turns out to be public under Section 14 from the date of passing Special Resolution. However, the change in its name, by deleting the word “Private” becomes in effect only on the issue of fresh incorporation certificate by the ROC.
