Pre-IPO Conversion

Converting a private company into a public company ahead of an IPO is governed by Sections 14 and 18 of the Companies Act, 2013, read with Rule 33 of the Companies (Incorporation) Rules, 2014.

The process requires: a board resolution approving the proposed conversion and calling an extraordinary general meeting (notice under Section 173(3)); shareholder approval by special resolution (requiring not less than 75% approval) altering the Memorandum of Association and Articles of Association to remove the private-company restrictions under Section 2(68); compliance with the minimum composition for a public company — at least 7 shareholders and 3 directors under Section 149(1); filing of Form MGT-14 with the Registrar of Companies within 30 days of passing the special resolution; and filing of Form INC-27 (application for conversion) with the ROC, which on approval issues a fresh Certificate of Incorporation reflecting the company's new status as a public company. The full process typically takes 4–8 weeks from board approval to the fresh certificate.

This conversion is a structural readiness step and is distinct from the SEBI (ICDR) Regulations, 2018 listing process itself — a converted public company still has to separately satisfy SEBI's eligibility, disclosure, and issue-process requirements (mainboard or SME platform) to actually list. We scope this engagement as the Companies Act conversion mechanics; readiness for the SEBI listing process itself is addressed under our SME IPO advisory service.

Pre-IPO conversion is the restructuring of the shareholding and the instruments before the IPO — the conversion of the compulsorily convertible preference shares and the debentures into the equity, the consolidation or the split of the share capital, the conversion of the partnership or the proprietorship into the company where the business has not yet been incorporated, and the compliance with the Companies Act 2013 and the Income-tax Act 1961 for each conversion. The pre-IPO conversion is the housekeeping of the capital structure before the company files — and the market reads the capital structure the way it is left at the filing.

The IPO requires a clean and a simple capital structure — the equity with the clear ownership, the instruments converted, the ESOP pool reserved, the shareholding pattern disclosed — and the conversion is the work of getting there before the DRHP. The conversions carry their tax positions: the conversion of the CCPS into the equity under the amalgamation-style rollover provisions where they apply, the stamp duty and the registration, and the disclosure of the changes in the offer documents.

The cost of a late conversion is the disclosure and the tax problem at the filing: the instruments that the DRHP must disclose unconverted, the conversion that triggers the tax at the wrong time, the capital structure that the market reads as complexity and discounts.

This service is for companies preparing for the IPO. We review the capital structure and the instruments, plan the conversions — the CCPS, the debentures, the share splits and the consolidations — execute the conversions under the Companies Act with the filings, manage the tax positions under the Income-tax Act, and clean up the capital structure so the company files with the structure the market expects.