Monday, 6 June 2011

How Private limited company can be converted into Public limited company

According to 1984 company ordinance a private company has been defined in the following words :
1. Private company means a company which by its articles restricts the rights to transfer its shares.
2. Limited the number of its members to 50 .
3. It also prohibits any invitation to the public to invest their money in company.
4. At least 2 persons can form the company.
5. The word Private Limited must be used with the name of company.


Cause of Conversion :-
Private company business can not expand due to limited capital, limited production and limited sale. So to expand the business private company is converted into public company.

Methods of Conversion :-
The private company can be converted into public company in the following way :
( A ). The private company should after following provisions in its articles of association.
1. Shareholders may transfer their shares.
2. They may invite the public for subscription of shares and debentures.
3. Restriction on maximum limited ( 50 ) should be removed.

( B ). New articles of association should be submitted to register within 14 days of the alteration. An important documents required for conversion like consent and declaration of directors about shares should also be attached.

( C ). The number of members must be increased to 7 if there are less than 7.

After submission of the documents to the registrars office private company may be converted into public company.


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