Conversion Of Private Company To A Limited Company

The Private Limited Company conversion follows a properly regulated legal procedure. This procedure is governed by the Companies Act provided by the Ministry Of Corporate Affairs. A private company can convert itself to the limited company by altering its memorandum and articles of association. This is further obtained via all shareholders' approval, passing of a special resolution in general meeting.

Key Points

Change of name by passing a special resolution.
Approval of the Central Government is not required.
The name needs to be deleted from Private limited company to Public limited company.
Alter the company's Articles of Association by deleting prohibitions, restrictions and limitations defining a Private Limited Company.

Procedure

The procedure on converting a Private company to a Public company is described in detail below.

Amendment of Articles of Association

As a first step, we must identify the clauses defining a private company as per the Articles of Association and make the necessary changes. Any details that mention or relates to the private limited company must be removed. The word "private limited" must also be dropped from the company's name.

Board meeting

A Board meeting must be scheduled to fix the time, place, and agenda for altering articles of association. The name of the company must be altered via a special resolution. A notice must be given to the general meeting proposing a special resolution. The Articles of Association of a private company may be dispensed with the explanation statement and give shorter notice of general meeting.

The Special Resolution

The special resolution must be passed in the general meeting and it must be filed with the registrar attaching the explanatory statement in the e-form no: MGT14 within 30 days of its passing. A copy of the resolution along with a copy of the explanatory statement and the altered articles of association must be attached to the form along with the prescribed fees.

Documentation

Intimation of conversion from a private company to limited company must be executed in form No: INC-27 along with the proof of fees payment with the attachments. It must be filed for future references. The minutes of the members' meeting and the altered Articles of Association are mandatory attachments to be recorded. The e-forms are to be digitally signed by the managing director /director/manager/secretary of the company and to be duly authorized by the Board of Directors.

Certification & Completion

Form # MGT-14 is to be certified by a Chartered Accountant / Cost Accountant/ Company Secretary in practice by digitally signing the e-form. Small companies and One-Person-Companies are exempt from this certification processing. The registrar of companies will issue a fresh certificate of incorporation in the changed name and on the issue of a fresh incorporation certificate, the change of name will be final and complete.

If the company has less than 3 directors and 7 members, the number of directors and members should be increased to 3 and 7 respectively.

Back to Learn

Frequently Asked Questions

Common questions about Conversion of Private Company to Public Limited.

The main difference is that a private limited company restricts the transferability of shares and has a limited number of members, while a public limited company can offer shares to the public and has no limit on the number of members.

A private company may want to convert to a public limited company for several reasons, such as to raise additional capital by issuing shares to the public, to increase its credibility and visibility, or to facilitate easier transfer of ownership or shares.

The legal procedure involves amending the company's Articles of Association, passing a special resolution in a general meeting, filing the necessary forms with the Registrar of Companies, and obtaining a fresh certificate of incorporation reflecting the change.

No, approval from the Central Government is not required for converting a private company to a public limited company.

The Articles of Association must be amended to remove any clauses or references that define the company as a private limited company, such as restrictions on the transferability of shares or limitations on the number of members.

The duration of the conversion process can vary depending on the company's specific circumstances and the efficiency of the filing process with the Registrar of Companies, but it generally takes several weeks to a few months.

Yes, if the company had fewer than three directors or seven members as a private company, it must increase the number of directors to at least three and the number of members to at least seven after converting to a public limited company.

Yes, both small companies and One-Person-Companies (OPCs) can convert to public limited companies by following the same legal procedure and meeting the requirements for the number of directors and members.

A Chartered Accountant, Cost Accountant, or Company Secretary in practice is required to certify and digitally sign the e-form MGT-14, which is filed with the Registrar of Companies, except for small companies and OPCs, which are exempt from this certification requirement.

Once the Registrar of Companies issues a fresh certificate of incorporation in the new name, the conversion from a private company to a public limited company is complete, and the company can operate as a public limited company with the ability to offer shares to the public.