2020-08-20T09:36:41+00:00

Convert Private Limited Company to Public Limited Company

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Convert Private Limited Company to Public Limited Company

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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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Convert Private limited to Public Company in 3 Easy Steps

*Subject to Government processing time

Process of conversion into Public Company

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Compare different business structures to choose the right entity type

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 Requirement Mandatory Mandatory Mandatory Optional No
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 Protection Limited Limited Limited Unlimited Unlimited
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
Ownership Transferability Restricted No Yes No No
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
Uninterrupted Existence Yes Yes Yes No No
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 Rates Moderate Moderate High High Low
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
Statutory Compliances High Moderate Moderate Less Less
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
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Explore Private to Public company conversion

Frequently Asked Questions

2020-07-27T10:15:18+00:00

The primary requirement to incorporate a public limited company is that it requires minimum 7 shareholders and 3 directors. The minimum Authorised Capital of the company is prescribed to ₹ 5 Lakhs instead of ₹ 1 Lakh in case of Private Company.

2020-07-27T10:14:39+00:00

The suffix “Private Limited” will be replaced with “Limited.” For this change, the company has to seek permission from the shareholders and after that make the required changes in the MoA to get it amended.

2020-07-27T10:14:22+00:00

Since the Public limited company deals with the public’s money, it requires taking measures which increase the statutory compliance on its part. The regulatory liabilities are not restricted to the income tax but with ROC/MCA, SEBI, RBI, etc. It is important to take extra measures as the stakes are pretty high than any other company.

2020-07-27T10:14:04+00:00

Once the name approval letter is received from the ROC, the MoA and AoA are required to be drafted. The name clause and capital clause are altered along with the removal of restriction to Private Company as provided by definition.

2020-07-27T10:13:51+00:00

The company can start its business operations as a Public Company on receipt of the fresh Certificate of Incorporation from RoC.

2020-07-27T10:13:24+00:00

Legalwiz.in can help you convert your Private limited into a Public Limited Company within 20-25 working days. The time taken for conversion will depend on the submission of relevant documents by the client and speed of Government Approvals. To ensure speedy conversion, one should ensure that all the required documents are submitted.

2020-07-27T10:13:10+00:00

No. As the company’s PAN details remain same, there is no need of new registration. However, application of modification must be made for name change in records. LegalWiz.in can help you apply for modification at an additional cost.

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