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Conversion of Private Limited Company into Public Limited Company
Conversion of private Company to Public Company opens a replacement door of opportunities, especially within the sort of fundraising and reach of the market. the corporate can raise funds through Public Issues and accept deposits too. This structure is acceptable for the medium and enormous scale businesses. The conversion are going to be followed by the approval from Government and alteration to MoA & AoA.
Further, a minimum of seven members and three directors are required for the conversion of Pvt Ltd to Public Ltd. The rights, liabilities, powers, and obligations remain an equivalent for the corporate even after the conversion. Transfer of shares is feasible because the restriction on transfer is removed on conversion.
Benefits of Conversion of Private Limited into Public Limited
- Raising capital through public issue of shares: The ability to boost shares is the most beneficial factor of public Ltd. Especially, if it’s listed on a recognized stock market market, it’s the power to draw in investors from hedge funds, mutual funds, etc. the quantity of capital which will be raised is far greater than a personal Ltd.
- Brand Awareness: When the corporate goes public, it gets listed within the stock market and hence automatically more people get to understand about and its functions, hence the increased brand recognition will bring more business.
- Limited liability: The liability of every shareholder or member is restricted. This characteristic remains intact with this conversion. Their liability is restricted to the extent of their shareholding. The individual or personal assets of shareholders or members aren’t in danger.
- Transferability of shares: Shares during a public Ltd. are easily transferable as compared to private Ltd. The shareholders can sell the shares and enjoy its liquidity. This acts as an incentive for people to take a position as they’re not sure to remain with the corporate forever.