Both private limited company and public limited company are usually the joint stock companies which mean they are owned by multiple owners.

A basic difference between a private limited company and public limited company –

The shares of a private limited company cannot be shared freely. There are many restrictions on the transfer of shares. While a private limited company is restricted to sell its shares, a public limited company has no such restrictions. The shares can be sold easily.
The minimum number of owners of a private limited company is 2 and maximum can go up to 50. The minimum number of owners of a public limited company is 7 and there is no limit on the maximum number of owners.
The paid capital must be minimum 1 lakh rupees It is necessary that each member should invest an amount of 5 lakh from their pocket.

As the difference between both the types of companies is clear, we can allocate very easily that the public limited company has many advantages and it’s good to be converted to a high-level organization.

Requirements -

There are many requirements you need to fulfill to turn into a public limited company and remove limited from your company’s name. The foremost need is of 3 directors and 7 shareholders. You also need a paid capital of 5 lakh INR that means each shareholder should pay at least 5 lakh rupees to the company which is already mentioned above.

Benefits of a public limited company –
  • The public can also be invited to subscribe to the shares of a public limited company
  • Shareholders can buy and sell the shares easily and freely
  • Shareholders have limited liability
  • The shares can be raised easily.
How to transfer the assets to the newly formed private limited company?
This is a little difficult process. Your sole proprietorship should be ended within a time period of 2 -3 months from the beginning of your private limited company.
Procedure –
  • Firstly, all the members of the company especially the directors and shareholders have to submit an approval that they are ready for the conversion of the company into a public limited company.
  • After the completion of all the requirements for a private limited company, you have to change the name of the company. The word private has to remove. This process may take approximately 1 month.
  • Move to completely new articles set that will exclude the restrictive provision applicable to the private company.
  • It is important to attach the copy of approval given by the members.

A public limited company is much more suitable for business operations and is more famous also. The main advantage offered by a public limited company that may convenience you to go for the change are its – shares liquidity. Shares have high raised capital and are flexible to be sold and transferred.

If you are going for the change remember, it may take some time- approximately 40 – 45 days in total for this process. You will also need legal advice for the submission of accurate documents and following of correct procedure. Qiklegal is your best legal adviser, offering best services at very low cost. Consult the top lawyers and legal cooperatives only through Qiklegal.