Convert Public Limited Company to Private Limited Company in India

A Public Limited Company, legally known as PLC, is a Publicly-held Company. It is a limited company whose shares can be traded with the public. PLC can be listed or not listed on the stock exchanges. PLC requires a minimum of three directors as a prerequisite.

A Private Limited Company, or LTD, is a Privately-held Company. This implies that the business limits owner liability to its shares and limits the number of shareholders to 50. It also restricts shareholders from trading shares publicly.

Advantages of Private Limited Company

We have enlisted some advantages of having your Company registered as or converted to a Private Limited Company. It is the world's most commonly used business model and offers several advantages to its model subscribers.

Members Liability Limited to their Shares

The liability of shareholders is limited to their shares. Financial risks are a part of the business, but minimizing them and sustaining the business's progress are imperative. In an LTD, if, due to any reason, the Company were to be closed, the shareholders would not risk losing their personal assets.

Mutual Consent in Share Trading

The risk of takeovers is minimized when two shareholders trade shares, as the selling and buying of shares, are possible only when both parties have given their consent.

Perpetual Existence

Private limited companies are incorporated; hence it continues to exist even if the owner dies.

No Financial Obligations

Unlike Public Limited, LTD is not obliged to disclose its finances to the public.

Lesser Restrictions

It enjoys fewer legal restrictions as compared to a Public Limited Company. There is a necessity to call for a general meeting of members in Public Limited, whereas there is no such compulsion in Private Limited.

No Special Requirement for Business Commencement

The Public Company needs a Certificate of Commencement of Business to start a business after incorporation. In contrast, a Private Company can start its business just after receiving a Certificate of Incorporation.

Eligibility Criteria to Public Limited Company to Private Limited Company in India

Before you're allowed to Public Limited Company to a Private Limited Company, you must fit the following criteria

• All the directors should consent to the decision for conversion.
• You have to be prepared to make changes to the Memorandum of Association.
• Your Company must have adhered to all the Annual Compliance requirements.
• You should have the approval of your creditors before you can go through this conversion.
• Your Company must have repaid all the matured deposits and debentures or interest on such deposits and debentures.

Documents Required for converting a Public Limited Company to a Private Limited Company in India

The conversion applicant must submit the following documents and e-forms along with the Public to Private conversion application:

E-form MGT 14

Special resolution for conversion of a private company into a public company is to be filed with the following attachments:

• Certified True Copy of Special Resolution
• Altered Memorandum and Articles of Association (MOA/AOA)
• Certified True Copy of Board Resolution is optional.

Notice of Extra Ordinary General Meeting (EGM) 

This meeting is held to pass the board resolution, which is the approval of Directors to convert a Public Limited Company to a Private Limited Company.

E-form INC 27

It is the online application for the conversion of a Public Limited to a Private Limited company.

Minutes of the Meeting

The applicant must submit the MoM for approval for conversion and altered Articles of Association.

Process for converting a Public Limited Company to a Private Limited Company in India

The procedure for the Public to Private conversion is as follows:

Convene an EGM

Organize an Extraordinary General Body Meeting inviting your Members, Shareholders, Directors, Creditors, Suppliers, and most of those involved with your Public Limited Company on a continuous basis.

Submit Minutes of the Meeting

Draft a meeting of minutes within 15 days of convening this board meeting

Register your Share Dematerialization

Make an entry in the Register of members via the FORM MGT-1 in case you've yet to dematerialize your shares.

Acquire the Letter of Consent

The Company must acquire the directors' letter of consent to initiate this conversion.

Pass a No-Objection resolution

Convene a general body meeting and obtain "No objection" from the members of your Company and your Company's creditors

Alter MoA and AoA, if necessary

Make changes to the Memorandum of Association as well as Articles of Association.

Conversion Application filing

File the online form MGT-14 via the online MCA portal. Upload the letters of consent and other requisite documents when you do.

Conversion Advertisement

Advertise this conversion process to the local and national newspapers within 14 days of submitting the MGT-14 form. After your application is approved, Public to Private Limited Company conversion will be completed.

Our Assistance in converting your Public Limited Company to a Private Limited Company

We at Registrationwala provide end-to-end solutions for conversion from a Public Limited Company to a Private Limited Company.

Our Process

• Helping you organize the meeting
• Assistance with getting NOC of the creditors
• Filing the application for conversion.
• Reviewing the application and making changes if needed
• Ensuring that your business entity is converted as per your requirement.

Registrationwala.com is a leading legal consultancy firm providing comprehensive services relating to a Public Limited Company to a Private Limited Company.

So, take your first steps towards this conversion and reach out to us.

FAQs

Q. What is the procedure for conversion of Public Company to Private Company?

A. The procedure for the Public to Private conversion is as follows:

• Convene an EGM
• Submit Minutes of the Meeting
• Register your Share Dematerialization
• Acquire the Letter of Consent
• Pass a No-Objection resolution
• Alter MoA and AoA, if necessary
• Conversion Application filing
• Conversion Advertisement

Q. Is the decision for conversion of Public Limited to Private Limited feasible?

A. Yes. The process is relatively easy for the vice versa conversion. If you have any doubts regarding such conversion, you can contact the Incorporation Experts at Registrationwala.

Q. Ltd Public or Private, which model is better?

A. It depends on your preference and requirement. You can choose the private model if you prefer share transferability among your closed group members. To raise public funds, you can go for the public model.

Q. What is the responsibility of the Board for the conversion of Public Company into Private Company?

A. The Board must pass a resolution stating the No-Objection certificates from the Board Members for conversion.

Q. Which form to fill for the Public to Private Company conversion?

A. MGT-14 form

Q. What is the main difference between Private Limited Company and Public Limited Company?

A. Private Company limits the share transferability among its closed members. In contrast, Public Company open their shares to the general public.