Stepwise process for conversion of Private Company into Public Company
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Sr. No. |
Steps/Requirements |
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1. |
Public Companies are required to issue the shares in Demat Mode Only and they are required to provide the Demat Facility to all the existing Shareholders. |
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2. |
We need to select and appoint the Registrar & Share Transfer Agent ("RTA") and need to execute the Tri-party agreement with RTA & CSDL. |
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3. |
The company is required to obtain the ISIN for the demat of their Shares and thereafter all the shareholders can dematerialize the shares. RTA will provide the list of documents for ISIN creation for shares/securities. |
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4. |
Promoters and Directors are compulsorily required to hold the shares in demat mode. |
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5. |
All the Promoters and Directors are required to open the Demat Accounts in their own name. Shareholders are required to approach the respective Depository Participants for demat of their physical shares. |
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6. |
Conduct a Board Meeting to pass Board Resolution for the approval of the Notice of General Meeting, Conversion, and for the alteration of MOA and AOA. |
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7. |
Conduct General Meeting and pass Special Resolutions for the Conversion and alteration in MOA and AOA and for the name change of the company (delete the word "Private"). |
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8. |
File an E-Form MGT-14 within 30 days from the passing of the Special Resolution. The following documents to be attached in Form MGT-14:
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9. |
File an E-Form INC-27 for conversion of Private to Public Company within 15 days from passing of Special Resolution but after filing of Form MGT-14. The following documents to be attached in Form MGT-14:
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10. |
After the approval of both the above forms the CIN number of the Company will be changed by substituting the word "PTC" to "PLC". |
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11. |
After Conversion, the following actions are to be taken:
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12. |
Passing of Necessary Shareholders Resolution as may be required for normal course of Business of Public Company. |
The benefit of the following exemptions given to the Private Company will not be available to any public companies after conversion
- Public Companies shall file form MGT-14 for all the resolutions passed under Sections 117 & 179 (3).
- For acceptance of deposits from members private company not required to comply with the conditions of clause (a)-(e) of Section 73(2). But in the case of a Public Company, it is required to comply with the conditions of clause (a)-(e) of Section 73(2).
- Public Companies can't accept deposits from the relative of directors unless they comply with the provision of Section 73.
- Provisions of Sections 101 to 107 will be applicable.
- Provisions of Section 109 will also be applicable to Deemed Public Company.
- Provisions of Section 43 (Kinds of Share Capital) & 47 (voting rights- in case of pref. shareholders did not pay a dividend for two years) will also be applicable.
- Exemption under Section 67 relating to Restrictions on Purchase by the Company or Giving of Loans by it for Purchase of its Shares will not be available.
- Provisions of Section 160 (Right of Persons Other than Retiring Directors to Stand for Directorship) will be applicable.
- Internal Financial Controls will become applicable to Public Company.
- Provisions of Directors liable to retire by rotation will be applicable.
- Provisions of Section 180 with respect to Restrictions on Powers of Board to sell, lease or otherwise dispose of the whole or substantially the whole of the undertaking of the company and to borrow money, where the money to be borrowed, together with the money already borrowed by the company will exceed aggregate of its paid-up share capital, free sreserves and securities premium apart from temporary loans obtained from the company's bankers in the ordinary course of business
- Exemptions under Section 185 relating to Loans to Directors and any other person in whom the Director is interested, will not be applicable. This exemption is not available to public companies. A Loan can be given to a public company if the Director has a shareholding at 25% whether individually or together.
- Exemption under Section 188 (1) (Related Party Transactions) will not be available.
- In the case of ESOP, All Public companies will required to pass a Special Resolution.
- Exemptions relating to Internal Financial Controls will not be available. Section 143 (3)(i).
- Disclosure of Interest and Participation Section 184: In a private company, an interested director can participate in the meeting after disclosure of interest. However, in a public company, such participation is not permitted.
- Provisions of Section 197 with respect to Managerial Remuneration will become applicable.
- Provisions of the following sections which are exempted to Private Companies will become applicable to Public Companies:
Section 101: Notice of Meeting
Section 102: Explanatory Statement
Section 103: Quorum of the General Meeting
Section 104: Chairman of the General Meeting
Section 105: Proxies
Section 106: Restrictions of Voting Rights
Section 107: Voting by show of hands
Section 109: Demand of Poll
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