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A Private Limited Company is a small business which is maintained privately, it is one of the highly recommended businesses in India especially for startups. The registration of the private limited company is governed by The Companies Act 2013 in India. According to the Companies Act, 2013, a minimum of 2 shareholders is needed to begin a private company, while a maximum of 200 members. In case a private limited company undergoes any financial risk, the personal assets of members or shareholders are not subject to sell, i.e. they ought to have limited liability.
A limited company allows limited liability to its proprietors and to its management team. But in the case of a public limited company, a firm can sell shares to investors which are considered as a beneficial act in raising the capital for the business. To establish a Public Limited Company, a minimum of three Directors are required and there is no cap on the maximum number of members. Importantly, it has more strict regulatory requirements when compared to a Private Limited Company.
Public Limited Company is a different type of company but holds most of the characteristics of a private limited company. It enjoys more benefits such as ease of transferability, borrowing capacity, limited liability, and perpetual existence. Like any other companies in India, Public Limited Company is also registered according to the rules and regulations of the Companies Act, 2013.
Most Suitable Business For Heavy Investment
Favourite Business Type For Investors
Easy To Raise Funds And Loans
Uninterrupted Existence
Owning Property
Easy Transfer Of Shares
Digital Signature Certificate or DSC and Director Identification Number or DIN of two directors.
Preparation and drafting of MOA or Memorandum of Association and AOA or Articles of Association of the company.
PAN card and TAN number.
Find the unique name for the company, application and name reservation.
CIN or Certificate of Incorporation.
| 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 |
| Certificate for commencement of business | No | Yes |
| A term worked at the end of the name | Private limited | limited |
| Statutory meeting (mandatory) | No | Yes |
| Managerial remuneration | Must not exceed more than 11% of net profits | No restriction |
A public limited company is a type of business which can be listed on a recognized stock exchange and the stocks can be traded to the general public. Whereas, a private limited company is neither listed on the stock exchange nor sold to general public. It is privately admitted by its affiliates or members.
It is mandatory for the public limited company to have a general body meeting with all its members. Whereas in a private company, there is no such compulsion.
It is mandatory in a public limited company to issue the prospectus or statement. However, this procedure is not in a private company.
A public limited company needs the post-incorporation certificate of commencement to start its function. But, a private company can start its operation soon after its incorporation.
The scope of a public company is huge as the directors of the company can raise its capital from the general public and have to endure many legal restraints. On the contrary, there are fewer members and few restrictions; hence the scope of a private limited company is restricted.
And in the case of Public Limited Company, there is a greater regulatory responsibility; it has to inform all needed information to the public as they are the shareholders or prospective shareholders.
A signified written resolution is affirmed, including the information of general meetings of a private limited company. Whereas in a public company, it should appoint a company secretar, to do all these works.
Copy of PAN card of the directors
Copy of Aadhar card or voter ID of the directors.
Passport size photographs of directors.
The rental agreement of the registered business place.
Electricity or water bill of the registered business place.
If the office is its own place then the copy of property papers is required.
NOC or No Objection Certificate from the landlord.
Basically, a company already enrolled in a type of business structure may change itself as a company of another type of business structure by modifying the memorandum and articles of the company. An application as per the requirement is needed and it should be submitted to the registrar of that specified state. The registrar after verifying and getting convinced with all steps and with the required documents, the formal registration of the company is done. After the registration process, the documents required for the conversion are verified by the Registrar, if everything is fine that the registrar will grant a certificate of incorporation. Procedure for Conversion into a Public Limited Company
Procedure for Conversion of private limited company into a Public Limited Company (consistent to applicable provisos of the Companies Act, 2013 and the Companies (Incorporation) Rules, 2014):
The Directors are to be formally informed with a notice regarding the agenda of the Board Meeting. This notice has to be sent to the company’s respective registered addresses at least one week or 7 days prior to the date on which the Board Meeting is planned to be held. The mention below matters have to be specified in the agenda of the Board Meeting for discourse:
Once the resolutions of the company are passed in the extraordinary general meeting or EGM, form filing formality with the Registrar of Companies has to be completed within the specified time frame.
a)E-Form MGT – 14:
This E-Form MGT – 14 form is a form which has to be filed with the RoC within the time period of 30 days after passing there solutions along with the specified fees. The form can be filed on the MCA portal, along with the following documents:
– Notice of the extraordinary general meeting or EGM with the Explanatory Statement according to Section 102 of the Act.
– Certified copies of the company resolutions which are passed in the extraordinary general meeting or EGM.
– Copy of the newly drafted MOA.
– Copy of the newly drafted AOA.
b)E-Form INC – 27:
This E-Form INC – 27 form is the application which is used for the conversion of a private limited company into a public limited company. This form can be filed with the RoC within the time period of 15 days after passing of the resolutions in the extraordinary general meeting or EGM. The following documents have to be enclosed with the form:
– Minutes of the extraordinary general meeting or EGM.
– Copy of the newly drafted AOA.
– Copy of the newly drafted MOA.
– Copy of the resolution(s) passed at the extraordinary general meeting or EGM. – List of the members or shareholders of the company along with the essential documents.
A new PAN card has to be applied for the company.
All letterheads and stationery related to business should be updated with the new company name.
The bank account information of the company has to be updated.
The intimation or information regarding the conversion into public limited company has to be given to the tax authorities and all other related personnel.
Printed copies of the newly drafted MOA and newly drafted AOA have to be prepared at the earliest.
Along with conversion, the company will be listed on the stock exchange which is another advantage of conversion. As it helps the company to raise more capital for the company and also alters them to scale their business function in an easier way.
Answered by our experts
Actually, the shareholders are the owners of a public limited company, but they vote and elect a board of directors who have the power to manage and control the company on behalf of the business.
You can convert your Private limited into a Public Limited Company within 20-25 working days but it is good to get guidance from the experts. The time taken for conversion completely depends on the submission of needed documents.
No. application of modification can be made for name change in company records.
Yes, The suffix 'Private Limited” must be replaced with 'Limited” after conversion.
Once the name approval is sanctioned from the ROC, the company can draft the MoA and AoA.