Conversion of Proprietorship to Public Limited Company

Conversion of Proprietorship to Public Limited Company - Process, Procedure, Document Required, Fees, Eligibility, Duration

A Public Limited Company sells shares to the general public. It also raises capital from the public. Its stock can be purchased by anyone, either privately through an initial public offering or publicly through stock market exchanges. A Public Limited Company is highly regulated and must disclose its genuine financial health to its shareholders.

Advantages of converting to Public Limited Company

A Proprietorship that converts to a Public Limited Company will reap the following benefits:

• A Public Limited Company's shareholders have limited liability. In the event of an unanticipated liability, the liability would be limited to the firm and would not affect the shareholders in any manner.
• In a PLC, shares are made available to the general public, which means that anyone can invest in a Public Limited Company. As a result, the company's capital improves.
• Being listed on a stock exchange means that mutual funds, hedge funds, and other traders are aware of the company's operations. This could lead to more commercial opportunities for the Public Limited Company.
• A Public Limited Company is regarded as a legal entity, distinct from its stockholders. In that sense, it can have PAN, bank account, contracts, licenses, etc.
• A shareholder's shares in a Public Limited Company can be easily transferred to other legal bodies, whether an individual or an organization. This gives flexibility in work.
• The Board of Directors governs the organization of a PLC. The investors elect the Board of Directors. The company's director can be changed to ensure the business's long-term viability.

Prerequisites of Public Limited Company

To be a Public Limited Company, an organization has to have the following prerequisites:

• A minimum of three directors is necessary, with no upper limit on the number of directors.
• A minimum of seven shareholders is required for a Public Limited Company.
• A share capital of at least Rs. 5 lakhs is necessary.
• All Public Limited Companies must include the word "limited" after their name.