With Vakilsearch, you can easily convert your Private Limited Company to a Public Limited Company.
Let us have a brief understanding of what is private and public limited company.
Private Limited Company
A company that is privately held for small businesses. The liability of the members of a private limited company is restricted to the number of shares respectively held by them. The shares of a private limited company can’t be traded.
Public Limited Company
A company whose shares are traded on a stock exchange and can be purchased and traded by anyone. It is also called a publicly held company. As the name suggests, a public limited company is a company that offers company shares to the general public. The Company’s Act 2013 also defines a public limited company as one that has limited liability and offers company shares to the public. Anyone can acquire the stocks of such a company either through stock-market trading or via IPOs ( Initial Public Offerings).
Quick Share Transfer
Shareholders of a public limited company can transfer their shares with great ease. All they need to do is file the share transfer form and hand over the share certificate to the buyer. The process of transferring a share to another business structure is very tedious.
The advantage of the public limited structure is that you can leverage it to raise capital from the general public through shares. This would, however, require listing on a stock exchange. All public limited companies can issue fixed deposits, debentures, convertible debentures to the general public.
Public limited companies need to disclose their audited statement of accounts, inform the regulatory bodies of any structural change, and hold annual general body meetings for all shareholders. These compliance procedures bring a great deal of credibility to the organization.
A company already enrolled in a class may change itself as a company of another class by modification of memorandum and articles of the company. An application in this regard is required to be made to the registrar. The registrar after being convinced that all steps comply with the requirements, then it shall close the former registration of the company. After registering the documents related to the conversion, the Registrar shall issue a certificate of incorporation. The transformation of a company shall not assume any debt, claim, liabilities, and obligations. Such debt, liabilities, and contracts may be enforced and executed as if there is no such exchange.
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