
Difference Between Listed Company and Unlisted Company
As a business grows, the way it raises money and manages ownership starts to matter more.
5 min read
Open the company to public investment. A public limited company can raise capital through a public issue, accept deposits, and let its shareholders sell their shares freely.
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What going public opens up, what it requires in members and directors, and why companies choose LegalWiz.in to handle the conversion.
Converting a private company into a public company opens a new set of opportunities, in fundraising above all and in reach of the market. The company can raise funds through a public issue and can accept deposits, neither of which a private company may do. It is the structure appropriate to medium and large scale businesses.
A minimum of seven members and three directors are required for the conversion. The rights, liabilities, powers and obligations of the company remain the same throughout, because it is the same company in a different form, and the restriction on the transfer of its shares is removed, so transfer becomes possible.
The conversion follows approval from the government and the alteration of the MoA and AoA. The suffix "Private Limited" is replaced with "Limited", and the company can begin operating as a public company from the date it receives its fresh Certificate of Incorporation.
Your relationship manager and the filing team handle everything below. You supply the documents once and approve the drafts.
Government fees are charged at actuals. Seven shareholders and three directors have to be in place to meet the public company requirement, so the details and consent of the incoming people are needed before the filing.
The suffix "Private Limited" is replaced with "Limited". That needs the shareholders’ permission and an amendment to the MoA.
Both are altered, along with the removal of the restrictions the definition of a private company imposes.
The regulatory obligations extend beyond income tax and the ROC and MCA to SEBI, the RBI and others.
The rights, liabilities, powers and obligations of the company are unchanged, and the PAN details stay the same.
The ability to issue shares to the public is the single biggest advantage. Listed on a recognised stock exchange the company can attract hedge funds, mutual funds and other institutional investors, and the amount that can be raised is far greater than a private limited company can reach.
On going public and being listed on a stock exchange, more people come to know the company and what it does. That recognition brings business with it.
Each shareholder’s liability stays limited to the extent of their shareholding, exactly as it was before. The personal assets of the shareholders and members are not at risk.
Shares in a public limited company are easily transferable compared with a private one. Shareholders can sell and benefit from that liquidity, which is itself an incentive to invest, because nobody is bound to stay with the company forever.
What actually changes on conversion. Open any row to read the detail behind both answers.
| Attribute | Public Limited Company | Private Limited Company |
|---|---|---|
| What it takes to set up | ||
| Minimum 7Seven members are required for the conversion to a public company. | Minimum 2Two shareholders are enough, and the same individual may also be a director. | |
| Minimum 3Three directors are required for a public company. | Minimum 2Two directors are enough, at least one of whom is resident in India. | |
| ₹5 lakhThe minimum authorised capital prescribed for a public company. | ₹1 lakhThe minimum authorised capital for a private company. | |
| “Limited”On conversion the suffix "Private Limited" is replaced with "Limited". The change needs the shareholders’ permission and an amendment to the MoA. | “Private Limited”The name of a private company ends with this suffix. | |
| Raising money | ||
| Public issueThe company can raise funds through a public issue and accept deposits. Listed on a recognised exchange it can attract hedge funds, mutual funds and other institutional investors, and the amount that can be raised is far greater. | Private onlyA private company raises capital privately, through private equity, ESOPs and the other routes open to it, and may not invite the public to subscribe. | |
| UnrestrictedShares are easily transferable, so shareholders can sell and benefit from that liquidity. The restriction on transfer is removed on conversion. | RestrictedShares transfer freely between members, but a transfer to a non-member requires the shares to be offered to existing members first. | |
| What it costs you | ||
| Several regulatorsBecause a public company deals with the public’s money it carries a higher statutory compliance burden. Its regulatory obligations are not restricted to income tax but extend to the ROC and MCA, SEBI, the RBI and others. | ROC and MCAA private company’s obligations run principally to the Registrar of Companies and the Ministry of Corporate Affairs, with the tax authorities alongside. | |
| Next step | Get started | Know more |
Swipe the table sideways, Public Limited Company stays in view. Open any attribute to read the detail behind both answers.
The personal set covers every shareholder and director, the incoming ones included. The last three are the company’s own papers.
For every shareholder and director. A foreign national must provide a valid passport instead.
The voter ID, passport or driving licence of every shareholder and director.
The telephone bill, electricity bill or latest bank statement of every shareholder and director.
A recent passport size photograph of every shareholder and director.
The electricity or telephone bill for the registered office address, a no objection certificate from the owner, and the rent agreement where the premises are rented.
The Certificate of Incorporation, and the MoA and AoA of the company.
A duly certified copy of the latest audited financial statements.
The income tax return filed for the previous financial year.
Step 01
Step 02
Step 03
Subject to government processing time.
Twenty-five working days end to end, and two of the four phases are waits on the Ministry: the alteration has to be approved before the conversion itself can be filed.
2 of 25 working days
5 of 25 working days
8 of 25 working days
10 of 25 working days
Subject to government processing time. The time taken depends on how quickly the documents are returned and on the speed of the government approvals.
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A minimum of seven shareholders and three directors.
The minimum authorised capital prescribed for a public company is ₹5 lakh, against ₹1 lakh for a private company.
Yes. The suffix "Private Limited" is replaced with "Limited".
For that change the company has to seek permission from the shareholders and then make the required amendment to the MoA.
Because it deals with the public’s money it has to take measures that increase its statutory compliance.
Its regulatory obligations are not restricted to income tax; they extend to the ROC and MCA, SEBI, the RBI and others. The stakes are higher than for any other company, so the extra measures are warranted.
Once the name approval letter is received from the ROC, the MoA and AoA are drafted.
The name clause and the capital clause are altered, along with the removal of the restrictions that the definition of a private company imposes.
From the receipt of the fresh Certificate of Incorporation from the Registrar of Companies.
LegalWiz.in can convert a private limited company into a public limited company within 20 to 25 working days.
The time taken depends on how quickly the relevant documents are submitted and on the speed of the government approvals. Returning every required document promptly is what keeps a conversion on schedule.
No. The company’s PAN details remain the same, so no new registration is needed.
An application for modification does have to be made to record the change of name. LegalWiz.in can file that at an additional cost.
Open the company to public investment.
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