Compared to the private limited company structure, the public limited company has some key differences that make it ideal for large companies.
You can enjoy the exciting journey of transitioning your private limited company into a public limited company, which opens up new opportunities and has its own set of advantages. Here are some steps you can take to convert your private limited company into a public limited company if you have decided to do so.
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In the meantime, we hope this article can provide you with a better understanding of the process. If you have any questions regarding the process, please don’t hesitate to reach out to our experienced corporate secretaries in Singapore.
A public limited company has the following main features.
Public limited companies share some similarities with private to public company conversion, but their features make them more suitable for large businesses. Among these are:
- Shareholders: In order to become a public limited company, you must have at least 50 shareholders, which makes it ideal for large organizations
- Public: Public limited companies are able to offer shares to the general public when they go public instead of a private limited company
- Regulations: Considering the nature of public limited companies, accounting and reporting requirements are more strict
In addition to having a registered office in Singapore, a public limited company must also have one.
What are the benefits of converting your private limited company to a public limited company?
Advantages
There will be a need to convert a private limited company to a public limited company when there are more than 50 shareholders. Transferring your private limited company into a public limited company and getting a listing has the following advantages:
When you have more than 50 shareholders of a private limited company, you will have to convert the company into a public limited company – this has several advantages that come with becoming a public limited company, such as:
- Unlock and maximise long-term shareholder value
Increasing a private limited company’s value in the market through the conversion to a public company’s is the best way to bring the brand to the forefront of the marketplace, as well as afford the original shareholders a substantial Return on Investment (ROI).
- Liquidity
An investor who wishes to buy a private limited company stock has to look for investors willing to pay for the stock, while an investor who wishes to buy a public limited company stock has an open niche market where it is possible for buyers and sellers to do business with each other together.
- Compensation
The market value of the securities awarded to the directors, officers, and employees of a publicly traded company is determined by the price at which the stock market sells this stock. This stock exchange selling price determines the value of the securities that are granted.
Disadvantages
Private limited companies can be converted into publicly listed companies with some advantages, but also some disadvantages. These include:
- The cost of setting up an online business is high
- Accounting and reporting requirements have become more stringent
- The company is unable to control its shareholders, so there is a higher risk of a hostile takeover
- The dividend percentage will be determined by the annual profits of the company
- There is a risk that shareholders will disagree when it comes to making business decisions that affect their interests
Also, Read:-
- Steps for the Conversion of Private Limited Company into Public Limited Company
- Documents Required for Conversion of a private limited company to a public limited company
- Public Limited Company In India Registration Requirements