The type of business registration usually affects the flow of cash and management of finances in a company. Since, there are minimum requirements for all sorts of businesses choosing the right structure is important.
Though, Private Limited Company is the most popular form of business in India however; you can also convert it to another business form if you wish to grow it on a large scale.
A Private Company, which has a paid up share capital of Rs. 50 Lakh or an average annual turnover of Rs. 2 Crore or less, can convert itself into One Person Company (OPC). This excludes Companies registered under Section 8 of the Companies Act.
The concerned department will verify all the details/documents of the Company and upon satisfaction, will issue a new Certificate of Incorporation after cancelling the earlier one.
To convert a private limited company to Limited Liability Partnership, the Company must -
Once all these conditions are fulfilled, a special resolution needs to be passed in the Board Meeting for converting into LLP and authorising any director to apply for the company name (LLP).
The company now needs to apply for a name of the company as per the Limited Liability Partnership Act, 2008. RUN-LLP is filed with the Registrar of Companies attached with a copy of the Board Resolution agreeing to the conversion of the company.
After successful submission, the concerned authorities will examine, verify all the details and issue an approval certificate. Form FiLLiP can also be filed as an integrated form for the incorporation of LLP.
After getting name approval for LLP, Form FiLLiP is filed along with the proof of registered office address, subscription sheet duly signed by the partners, consent letter and appointment of designated partners and detail of LLP.
Form FiLLiP can also be used as a single application for reservation of company name, incorporation of LLP and allotment of DIN/DPIN. However; maximum 2 partners can use this form to get a DIN during the incorporation process.
A LLP Agreement (Form-3) is to be filed containing details like name of the LLP, name of the designated partners, profit sharing ratio, liability of each partner, form of contribution, rules governing the LLP and proposed business activity. The form needs to be filed within 30 days of incorporation.
To convert private limited into LLP form of business, Form-18 is filled with -
The form should be signed digitally by the designated partners of the company and certified by a professional CA/CS.
The Registrar and Ministry will verify all the details and issue a certificate of registration for the conversion. After receiving the certificate, the same needs to be communicated to the Registrar of the Companies through Form 14 along with a copy of Incorporation of LLP certificate
There are different reasons of why a Private Company would like to convert itself into a Public Company. Few of them are –
Once converted, a private limited company can trade its shares on stock exchange and create presence in the market.
To initiate the conversion process –
A board meeting is called for getting approval from all the directors of the company to convert into a public limited company by altering the Articles of Association.
If approved, the Director/ Company Secretary will issue notice to all the members, auditors and directors of the company to conduct an Extra-ordinary General Meeting (EGM) along with the date and time fixed for the meeting.
Get the approval of all the shareholders of the company and pass a special resolution to alter the Articles of Association (AOA) by filing form MGT-14.
This form needs to be filed within 30 days of passing the special resolution. A copy of notice to conduct the General Meeting, special resolution passed by the company, altered Memorandum of Association and Article of Association will also be attached with the form.
To convert a private limited company to public company form INC-27 is filed with the –
The Registrar of Companies will verify all the details after which the department will cancel the initial registration as a Private Limited Company and offer fresh registration as a Public Company.
The conversion of the company will not affect any debts, liabilities or contracts of the company. Post conversion, the company needs to get a new Memorandum of Association and Articles of Association, a new PAN Card on company’s name, increase the number of directors (minimum 3 in case of a public company) and intimate all the tax authorities about the conversion.