Conversion of Private Company into Public Company- Exam Point of View

Conversion of Private Company into Public Company

Key Benefits:

• •  Easy access to Public for raising funds Public limited Company is the only corporate form of organization which is allowed to raise funds from general public. Public Limited Company enjoys better avenues for borrowing of funds. It can issue debentures, secured as well as unsecured, accept deposits from the public, etc. Banking and financial institutions prefer to render large financial assistance to Public Limited Companies. Even a closely held Company can operate as a Public Company without diluting promoters’ stake. High market recognition Public Limited Companies as compared to other business forms enjoys better recognition in the market and bestows confidence in the stakeholders.

Key Requirements:

• • • • • • • •  Minimum Authorised Share Capital shall be Rs. 500,000 (INR Five Lac) Minimum Paid-up Share Capital shall be Rs. 500,000 (INR Five Lac) Minimum 7 Shareholders Minimum 3 Directors The directors and shareholders can be same person If the above requirements are not fulfilled by the Private Company, then the relevant alterations / changes to be made before conversion DIN (Director Identification Number) for all the Directors DSC (Digital Signature Certificate) for one of the Directors

Steps in Conversion of a Private Limited Company into a Public Limited Company

Step No.  Steps Timeframe (Working days) Processing 1 Board Meeting 2 Pass a resolution for deletion of articles (which are originally required to be included in the articles of a private company) and recommend it to the shareholders for adoption by them at a General Meeting 2 Notice of General meeting 21 Give 21 days' clear notice for the General Meeting proposing the Special Resolutions with suitable Explanatory Statement. 3 Filing of Special Resolution with RoC 2 • •  File Form No. 23 within 30 days of passing of the resolution  Attachments: Special Resolution and the Explanatory Statement 4 Filing of Prospectus or Statement in lieu of prospectus 15 • • • •  File Form 62 with the RoC Attachments: Prospectus or Statement in lieu of prospectus (SLP) Letter of Application to the Registrar for fresh Certificate of Incorporation Consent letter of the Auditor for inclusion of his name in the SLP