Let us first understand what is a public and private limited company. Public Limited Company is a separate legal business entity. In addition the shares of this company are traded on the stock exchange for the general public. Whereas Private owners own a private limited company. This type of entity limits the owner’s liability to their ownership stake. Further PLC also restricts shareholders from publicly trading shares. The main advantage of Public Company is that it can raise reserves on a large scale. Here are benefits when you convert PLC into a Public Limited Company.
Here is a detail procedure for voluntary conversion of Private Limited Company into Public Limited Company:
Pass a Board Resolution to get the in-principal approval of Directors for conversion. And also for increase in number of directors upto 3, if directors are less than 3.
Further fix date, day and time for conducting Extra-ordinary General Meeting to get an approval of shareholders.
In EGM, pass Special Resolution to get shareholders approval for Conversion of Private Company into a Public company. In addition obtain approval for alteration in the Articles of Association for such conversion.
Further which ROC shall enclose the previous registration and issue a fresh Certificate of Incorporation.
Shareholders are the owners of a public limited company. However, they elect a board of directors who make decisions on behalf of the business.
Shares in a public company are easily transferable in comparison to the PLC. Further the shareholders can sell the shares and benefit from its liquidity. Therefore this acts as an incentive for people to invest as they are not bound to remain with the company forever.
The company should fulfill the following requirements before converting into Public Limited Company:
– DSC for 1 Director
– Minimum 7 Shareholders
– DIN for all directors
– Minimum Authorized Share Capital of Rs 5 lakhs
– Minimum Paid up Share Capital of Rs.5 lakhs
– Director and shareholder can be the same person
– Minimum 3 Directors
Following are the documents required for conversion:
– Copy of PAN Card of Directors
– Passport size photograph of Directors
– Copy of Aadhaar Card/ Voter identity card
– Copy of Rent agreement, if property is on rent.
– Electricity/ Water bill (Business Place)
– Copy of Property papers (If owned property)
– In addition to rent agreement NOC of Landlord