Know about Conversion of a Private Limited Company into Public Limited Company
Conversion of Private Company into a Public Company opens a new door of opportunities, especially in the form of fundraising and reach of the market. The company can raise funds through Public Issue and accept deposits too. This structure is appropriate for the medium and large scale businesses. The conversion will be followed by the approval from Government and alteration to MoA & AoA.
Further, a minimum of 7 members and 3 directors are required for conversion of Pvt Ltd to Public Ltd. The rights, liabilities, powers, and obligations remain the same for the company even after the conversion. Transfer of shares is possible as the restriction on transfer is removed on conversion.
Benefits of Conversion of Private Limited into Public Limited
Documents Required for Conversion of Private Company to Public Company
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Process of conversion into Public Company
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|Private Limited Company||One Person Company||Limited Liability Partnership||Partnership Firm||Proprietorship Firm|
|Act||Companies Act, 2013||Companies Act, 2013||Limited Liability Partnership Act, 2008||Indian Partnership Act, 1932||No specified Act|
|Registration under the Act is mandatory to set up business as Private Limited Company||Registration under the Act is mandatory to set up business as One Person Company||Registration under the Act is mandatory to set up business as Limited Liability Partnership||Both registered and unregistered partnerships are legal, but registered entity is preferred||There is no registration criteria prescribed. But registration to establish legal identity is recommended|
|Number of members||2 – 200||Only 1||2 – Unlimited||2 – 50||Only 1|
|Requires minimum 2 and not more than 200 shareholders||Only an individual being Indian resident can be the shareholder||No bar to maximum number of partners, but minimum 2 Designated Partners are required||It is formed with minimum 2 partners, but not exceeding 50||The proprietor is the only owner of the firm|
|Separate Legal Entity||Yes||Yes||Yes||No||No|
|Private Company is separate entity and can own assets in its name||OPC is separate entity and can own assets in its name||LLP is separate entity from partners and can own assets in its name||Partnership firm does not have any separate identity from its partners||Proprietor and the business are same and not different|
|Liability of members is limited to the extent of unpaid value of shares subscribed||Liability of member is limited to the extent of unpaid value of shares subscribed||Liability of partners is limited to the capital amount agreed to introduce||Partners are jointly and severally liable to pay the debts of the Partnership Firm||Proprietor’s liability is to pay-off all debts and obligation of firm|
|Statutory Audit||Mandatory||Mandatory||Dependent||Not mandatory||Not mandatory|
|Auditor must be appointed within 30 days of incorporation||Auditor must be appointed within 30 days of incorporation||Applicable when turnover exceeds INR 40 Lakh or contribution exceeds INR 25 Lakh||Statutory audit not applicable. Tax audit may be applicable based on turnover||Statutory audit not applicable. Tax audit may be applicable based on turnover|
|Shares can be transferred with consent to other Shareholders||Shares are not transferable easily||Ownership can be changed with consent of other partners||Ownership is not transferable easily, clause of partnership deed should be referred||Firm in no different from proprietor and so ownership is not transferable|
|Change in members or director does not affect the existence of Private Company||Change in members or director does not affect the existence of OPC.
The nominee will take place of member
|Change in Partners or Designated Partners does not affect the existence of LLP||Change in partner leads to dissolution or formation of another partnership firm||Death or insolvency of proprietor directly affects the firm|
|Foreign Participation||Allowed||Not Allowed||Allowed||Not Allowed||Not Allowed|
|Foreign national are allowed to invest under the Automatic Route||Member, nominee and director must be Indian resident||Foreign nationals are allowed to subject to FDI Guidelines||Foreign nationals are not allowed to be a partner||Foreign Nationals cannot commence proprietorship business|
|Tax rate applicable for small companies is reduced to 25%||Tax rate applicable for small companies is reduced to 25%||With tax rate of 30% on business profit, tax benefits to partners is high||With tax rate of 30% on business profit, tax benefits to partners is high||Tax rates of individual applied to Proprietorship Firm|
|Apart from Annual filings, it has to comply with various provision laid down, but less compared to public company||Apart from Annual filing, compliance are less compared to Private Company||Annual filing and few event based filings are necessary||Separate ITR of partnership is filed, else there are no filing requirement||No compliances and no requirement to file separate ITR|
|Get Started||Know More||Know More||Know More||Know More|
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