Convert Private Ltd to Public Ltd
1. Introduction:
A company is an association of several individuals formed for some common purpose most of the present-day companies are incorporated under Companies Ordinance 1985. a company is capable of holding property, incurring debts, and suiting and being sued in the same manner as an individual.
2. Definition:
According to the Companies Ordinance 1984. See 2 (1) 9:
Company means a company formed and registered under the ordinance.
According to Lord Justice Lindley:
"A company is an artificial person created by law with a perpetual succession of a common seal. it has a legal entity, separate from the persons composing it. it can sue and be sued in its name."
According to S. E Thomas:
"A company is an incorporated association of persons formed usually for the pursuit of some commercial purpose."
3. Meaning of company:
The term "Company was originally derived from 2 Latin words
“Com” which means together and
“Panis” which means bread/meal
4. Kinds of company:
- Company Limited by shares.
- Company Limited by Guarantee
- Unlimited company
- Holding company
- Subsidiary company
- Private company
- Insurance company
- Company not-for-profit
- Single member private company (SMC) Through amendment in Companies ordinance (2002)
5. Private Company:
A private company means a company which by its articles
Restrict the rights to transfer its shares, if any.
Limits the number of its members to two fifty not including persons who are not employed by the company and as a single member.
Prohibits invitation to the public to buy shares and/or debentures.
6. Public company:
According to sec 2 (30) of the companies ordinance public company means a company which is not a private company. it is required to have at least seven members and seven directors appointed accordingly.
7. Main features of the company:
A company has a legal separate legal entity.
- The property of a company belongs to its company and not to its individual.
- A member of a company is never deemed to be an agent of the company.
- The company's shares are transferable.
- The liability of shareholders of the company is limited.
- Profit is distributed according to the article of association.
- It possesses a long life.
- Authorized capital is mentioned in the memorandum of association.
- Conversion of Private Company into public company conversion
- A private company may convert its status into a public company by altering its articles of association of a company to constitute it as a private company.
The company shall:-
On the date of the alteration, ceased to be a private company.
Within a period of fourteen days after the said date, file with the registrar either a prospectus or a statement instead of a prospectus.
Note: No approval of any authority for the conversion of status from a private company into a public company is required.
Procedure for the conversion of the status of a private company into a public company:
The following procedure is required for the conversion of a private company into a public company:-
Proposal for conversion of status:
The proposal for conversion of the status of a private company into a public company is first discussed and approved by the Board of Directors.
Notice for convening the general meeting:
21 days' notice accompanied by the proposed special resolution is issued for convening the general meeting of shareholders of the company.
Resolution for conversion of the status:
A special resolution is to be passed by the majority not less than three-fourths, of such members entitled to vote as are present in person or by proxy at a general meeting.
Amendment in Articles:
The Articles are required to be amended on change of the status, especially restrictive clauses applicable to a private company are to be deleted.
Increase directors and shareholders for the public company:
The Company shall increase its directors and shareholders if they are less than the minimum number which are required for a public company.
The company shall file the under-mentioned documents with the registrar:
The company shall file the under-mentioned documents with the registrar concerned:-
Form 26 within 15 days of passing of the special resolution.
An amended copy of the Memorandum and Articles of Association.
Prospectus or Statement in Lieu of Prospectus within 14 days of passing of the special resolution. The prospectus is required to be filed by the company that invites subscription from the general public, otherwise, a Statement in Lieu of Prospectus is to be filed.
Form 3 allotment of shares to new members /directors (in case, the new directors are not members of the company.)
Form 27 i.e. list of persons consenting to act as directors.
Form 28 Consent to act as directors.
Form 29 in case of an increase of directors, if the company does not already have three directors required for a public company.
Bank challan evidencing the deposit of filing fee of the documents
Issuance of Certificate by Registrar:
The registrar concerned shall issue a certificate regarding the conversion of the status of a private company into a public company and a filing certificate.
The Company may obtain a certified copy of the Memorandum and Articles of Association on payment of a copying fee of Rs. 500/- for the application submitted online and Rs. 1,000/- for the application submitted in the physical form.
The name of the company with the changed status i.e. without the word "private" shall be mentioned in all letterheads, bills, invoices, seals, etc. Copies of the Memorandum and Articles of Association are also recorded with the alteration.