Advantages of Public Limited Company

Optimal Business Framework for Substantial Investments

When contemplating heavy investment, the Public Limited Company emerges as the most suitable and prudent business structure.

Investors' Preferred Business Choice

For investors and stakeholders, Public Limited Companies stand out as a preferred avenue for deploying their financial resources. The inherent structure and transparency of this business model align with investor expectations. If the objective is to raise capital while also allowing for ownership transfer, this type of corporate entity remains an ideal choice.

Effortless Capital Generation and Loan Acquisition

The Public Limited Company's unique status permits it to list itself on multiple stock exchanges within India. This attribute empowers the company to source capital from stock markets and interested investors alike. Furthermore, the avenue for capital infusion extends to the general public, bank loans, and institutional investors.

Uninterrupted Corporate Continuity

Underpinning the Public Limited Company is the principle of "perpetual succession." This concept ensures the company's uninterrupted existence until it undergoes legal dissolution. Independent as a legal entity, the company remains unaffected by changes in membership, including departures or the passing of members.

Ownership of Assets

Endowed with juristic personhood, a Public Limited Company has the capacity to own, acquire, enjoy, and transfer properties in its own name. Shareholders have no claim to the company's property while the company remains operational.

Simplified Share Transfer

Notably, the process of disengagement from a Public Limited Company is streamlined. Exiting shareholders or purchasers need only transfer shares, accompanied by share transfer forms.

Checklist for Converting from Private Limited to Public Limited

1. Obtain Digital Signature Certificates (DSC) and Director Identification Numbers (DIN) for two directors.
2. Draft the Memorandum of Association (MOA) and Articles of Association (AOA) for the company.
3. Acquire PAN card and TAN number.
4. Secure a unique name for the company through name reservation.
5. Obtain the Certificate of Incorporation (CIN).

Differentiating Features: Private Limited vs. Public Limited

Features	Private Limited Company	Public Limited Company
Minimum Members	2	7
Minimum Directors	2	3
Maximum Members	200	Unlimited
Minimum Capital	₹1,00,000	₹5,00,000
Issue of Prospectus	No	Yes
Invitation to Public	No	Yes
Quorum at AGM	2 Members	5 Members
Commencement Certificate	No	Yes
Name Ending	Private Limited	Limited
Statutory Meeting	No	Yes
Managerial Remuneration	≤11% of Net Profits	No Restriction

Private Limited vs. Public Limited: A Distinction

A Public Limited Company can be listed on a recognized stock exchange and shares can be traded publicly, whereas a Private Limited Company remains privately held.

General body meetings are obligatory for Public Limited Companies, but not for Private Limited Companies.

Public Limited Companies must issue a prospectus, while this is not a requirement for Private Limited Companies.

Public Limited Companies need a post-incorporation certificate to commence operations, while Private Limited Companies can start functioning right after incorporation.

The scope of a Public Limited Company is broad due to its ability to raise capital from the public, whereas a Private Limited Company has limited members and scope.

Public Limited Companies have more regulatory responsibilities to inform shareholders and the public, while Private Limited Companies have fewer obligations.

In a Private Limited Company, written resolutions can suffice for certain decisions, whereas a Public Limited Company might need a company secretary for certain duties.

Documents required for conversion of a private limited into a public limited company

Documentation Requirements for Incorporation

When initiating the incorporation process, specific documents must be collated to facilitate a seamless transition. These essential documents play a pivotal role in establishing the legal foundation of the enterprise:

1. Copy of PAN Card: Furnish copies of the PAN cards of all directors involved in the company.

2. Copy of Aadhar Card or Voter ID: Present copies of Aadhar cards or voter IDs of the directors as a means of identity verification.

3. Passport Size Photographs: Provide recent passport-sized photographs of each director for identification purposes.

4. Rental Agreement: If the business premise is rented, supply a duly executed rental agreement outlining the terms of the lease.

5. Utility Bills: Present copies of recent electricity or water bills for the registered business location, affirming the active utility services.

6. Property Papers (if applicable): If the registered business premise is owned by the company, submit copies of relevant property papers to validate ownership.

7. NOC (No Objection Certificate): If the business premise is on rent, acquire a No Objection Certificate (NOC) from the landlord, signifying their approval for the company's operations at the location.

The meticulous compilation of these documents expedites the incorporation process, setting the stage for the business's official launch.

The Conversion Process: Private Limited to Public Limited Company

Transitioning from one business structure to another requires amendments to the memorandum and articles of the company. The conversion process entails submitting an application to the Registrar of Companies in the respective state. Upon thorough verification and satisfaction with the submitted documents, the company's formal registration is initiated. Following the registration, the Registrar reviews the conversion documents, and upon approval, a Certificate of Incorporation is granted.

Steps for Converting a Private Limited Company to a Public Limited Company:

1. Board Meeting:

   • Inform directors about the upcoming Board Meeting with an agenda notice sent at least 7 days in advance.
   • Discuss matters including approval for new and amended Memorandum of Association (MOA) and Articles of Association (AOA), conversion to a public limited company, and convening an Extraordinary General Meeting (EGM).
   • Authorize a Board Resolution to increase the number of directors to comply with public limited company requirements.

2. Notice and EGM:

   • Issue notices for the EGM to shareholders, directors, and auditors, allowing a minimum of 21 days' notice.
   • In case of 95% shareholder consent, a shorter notice can be given.
   • Resolutions are authorized by shareholders during the EGM.

3. Filing with Registrar of Companies (RoC):

   • File E-Form MGT-14 within 30 days after EGM resolutions are passed. Attach relevant documents like EGM notice, resolutions, new MOA, new AOA.
   • File E-Form INC-27 within 15 days after EGM resolutions are passed. Attach minutes of the EGM, new AOA, new MOA, resolutions, list of members or shareholders.

Post Conversion Requirements:

1. Apply for a new PAN card for the company.
2. Update company letterheads and stationery with the new company name.
3. Update the company's bank account information.
4. Inform tax authorities and relevant stakeholders about the conversion.
5. Prepare printed copies of the new MOA and AOA.

Conversion Advantage:

Converting to a public limited company offers the opportunity to list on stock exchanges. This provides the company with enhanced capital-raising prospects and facilitates streamlined business expansion.

By adhering to the conversion process, a private limited company can harness the advantages of a public limited structure, tapping into a broader scope for growth and capital infusion.