Many businesses start trading as limited company and re-registered as public companies at later date for listing and have their shares traded on the Stock Exchange. A public company may also re-register to a private company for a variety of reasons, for example, where they have decided that the company's securities should no longer be available to the public.
Re-registration of a private company to a public company
The procedure which the private company will have to go through in order to re-register as a public company is set out in section 42-47 of Companies Act 1985. The company cannot be re-registered unless it satisfies the various requirements in relation to share capital to which public companies are subject particularly the company's allotted share capital must not be less than the authorised minimum share capital of £50,000 and 25% of the nominal value of shares allotted plus the whole of the new premium on the shares must be paid up.
The company must pass a special or written resolution (a copy of which must be sent lo the Registrar of Companies within 15 days of it being passed) which:
(a) States that the company should be re-registered as a public company;
(b) Alters the company's memorandum by adding a clause stating that the company is to be a public company and making other consequential amendments to the memorandum (for example, changing the company's name to show that it is a public limited company); and
(c) Alters the company's Articles to meet the company's new circumstances for example, removing restrictions on transferability.
Once the resolution has been passed, a director or the company secretary must sign the application for re-registration and submit it to the Registrar of Companies with:
(a) A printed copy of the company's amended Memorandum and Articles of Association;
(b) a copy of a statement in writing by the company's auditors confirming that the company's net assets are not less than the combined total of its called up share capital and distributable reserves . This written statement should relate to a balance Sheet prepared within seven months before the date the company has made its application for re-registration);
(c) A copy of the balance sheet on which the auditors based their written statement together with an unqualified report on the balance sheet by the company’s auditors;
(d) Certain reports and statutory declarations where shares have been allotted (or non-cash consideration since the date of the balance sheet; and
(e) A fee of £20 (or £50 if same-day registration is required).
Once the Registrar of Companies is satisfied with these papers, a certificate will be issued confirming that the company has been re-registered as a public limited company.
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