Following are the modes in which a private company can become a public company:
1. Conversion by default:
When default is made by a private company in complying with any of the restrictions of section 3 (1) (iii) of the Act, the company shall cease to be entitled to the privileges and exemptions conferred on private companies and thereupon the provisions of law shall apply to the company as if it were not a private company.
It shall, for all purposes, become a public company, except when the Company Law Board (or the Tribunal) has granted relief to the company from such consequences on the ground that the failure to comply with the conditions was accidental or due to inadvertence or to some other sufficient cause.
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2. Conversion by choice:
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A private company may get itself converted into a public company by its own choice. In such a case it must:
(i) Pass a special resolution for amending its articles so as to delete the restrictive clauses mentioned in section 3 (1) (iii).
(ii) Increase the paid up capital to at least Rs. 5 lakh if it is less than that.
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(iii) Increase the number of members to 7 if it is less than 7.
(iv) Increase the number of directors to 3, if it is less than 3.
(v) File within 30 days, a copy of the special resolution for altering the articles and a prospectus or a statement in lieu of prospectus with the Registrar.
The company shall cease to be a private company from the date of the alteration of the Articles and will become a public company. (Sec. 44)