There are some key differences between the public limited company and the private limited company structure that make it ideal for large companies.
It is an exciting journey to transform your private limited company into a public limited company, which can lead to new opportunities and offers a number of advantages as well. Should you decide to convert your private limited company into a public limited company, here are some steps you need to take.
If you have any questions or concerns regarding this article, please do not hesitate to contact our experienced corporate secretaries in Singapore at our company. In the meantime, we hope this article can provide you with a better understanding of the process.
A public limited company has the following main features.
There are some similarities between public limited companies and procedure for conversion of private company into public company, but some of their features make them better suited to large companies. These include:
- Shareholders: To be a public limited company, you must have at least 50 shareholders, making it ideal for large firms
- Public: Unlike private limited companies, public limited companies can offer shares to the general public
- Regulations: Public limited companies are subject to stricter accounting and reporting requirements
A public limited company also has to have a Singapore registered office.
When you convert your private limited company into a public limited company, what are the benefits?
Advantages
Private limited companies will often need to transform into public limited companies when they have more than 50 shareholders. The following are some advantages of converting into a public limited company:
Having more than 50 shareholders will require you to convert your private limited company into a public limited company – you will benefit from several advantages when you become a public limited company, including:
Unlock and maximise long-term shareholder value
Converting a private limited company to a public company can enhance the brand’s value in the market as well as provide the original shareholders with a substantial Return on Investment (ROI).
Liquidity
If an investor wants to buy private limited company stock, he/she must search for buyers who are willing to pay for it, while an investor who wishes to buy stock of a public limited company has an open niche market where both buyers and sellers can conduct business with one another.
Compensation
This stock exchange selling price is used to determine the value of the stock that is granted as compensation to the directors, officers, and employees of a publicly traded company. This stock exchange selling price is used to determine the value of the stock that is granted as compensation to them.
Disadvantages
A private limited company can become a public listed company with some advantages, but also with some disadvantages. These disadvantages include the following:
- Online businesses are expensive to set up
- Reporting and accounting requirements have become more rigorous
- In the absence of control of the company’s shareholders, hostile takeovers are more likely to occur
- A company’s annual profits will determine how much dividend it pays out
- Business decisions affecting shareholders’ interests may result in disagreements by shareholders