Converting a private limited company to a public company in Singapore is a crucial step that requires deeply evaluating the pros and cons of doing so. For a private company to qualify to transform into a public company, it has to have more than 50 shareholders that are recognized by the government.
Here are some of the advantages of becoming a public company.
Easier Access to Capital
Most companies in Singapore decide to go public mainly because of the financial benefits. Initial Public Offering (IPO) is one of the strategies that the company can use to get more capital. The registered company can also get additional funding by offering debentures and transferable shares to the public.
The funds can be used to support its growth, offset debts, or fund capital expenditure. More often than not IPOs receive a lot of publicity which in turn introduces the company to a new segment of potential customers resulting in an increase in market share.
Enterprises that are registered as public companies in Singapore are allowed to give securities as a form of compensation for their employees, officers, and directors. The securities market value is dependent on the price that it is sold on the stock exchange.
By selling a registered private company’s stock, the stockholder has to find willing investors who are interested in buying its shares. Going public makes this process much easier because the enterprise creates an open niche market where both buyers and sellers can interact and do business.
Unlocking Shareholder Value
Converting into a public company is one of the best ways of demonstrating the real value of the brand in the market. More importantly, it offers a significant ROI for the original shareholders.
After successfully going through the company registration process, you want your business to gain prestige in the market. One of the guaranteed ways of achieving this goal is by offering the company’s stock to the public.
The company’s founders, managers, and co-founders will get immense personal prestige from being associated with a company that confidently goes public. It is also important to note that market influence makes it easy to market products and services as well as recruit key employees such as human resource managers.
Note that for the company to be listed on Singapore Stock Exchange, it has first to be approved by Singapore Exchange Limited.