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Conversion Of Private Company To Public Company

(Section 14, Section 15 of Companies Act, 2013 and Company(Incorporation) Rules,2014)

Subject to the provisions of this act and the rules made thereunder and the conditions contained in its memorandum, if any, a company may, by special resolution ,alter its articles including alterations having the effect of conversion of-

A Private Company into a Public Company:

Key consideration

  • Members of the company shall approve the conversion of company into public company by special resolution.
  • Name clause of memorandum needs to be amended to exclude the word 'Private'.
  • Increase the number of members to seven or more.
  • Amendments to the articles of the company for removal of restrictive provisions applicable to private company and is advisable to adopt a new set of articles applicable to a public company.
  • Company has not defaulted in filling of annual returns or financial statements or any other documents due for filling with the registrar.
  • Company has not defaulted in repayment of matured deposits or debentures or interest on deposits or debentures.

A Public Company into a Private Company:

Key consideration

  • Company to obtain prior approval of National Company Law Tribunal for conversion and to file a copy of order of tribunal approving alteration in form INC-27 within 15 days of receipt of order to Registrar of Companies.
  • Name clause of memorandum needs to be amended to include the word 'Private'
  • Amendments to the articles of the company for insertion of restrictive provisions applicable to private company and is advisable to adopt a new set of articles applicable to a private company.
  • Company has not defaulted in repayment of matured deposits or debentures or interest on deposits or debentures
  • Company has not defaulted In filling of annual returns or financial statements or any other documents due for filling with the registrar.

PROCEDURE FOR CONVERSION:

  • Send notice to directors for convening Board Meeting as per section 173 and Secretarial standards SS-1.
  • Convene and held BM.
    • To consider the proposal of conversion.
    • To approve amendment in Articles of association by Special resolution in General Meeting.
    • To authorize director or any other eligible person to carry out the effect and all necessary acts required.
    • To fix the date,time,venue of General meeting and authorize director or any other eligible person to carry out the effect and all necessary acts required.
    • To consider the list of creditors/ debenture holders and amount thereof.
  • Company to send notice to members u/s 101 and SS-2 for convening General Meeting.
  • Duly convene and conduct General meeting.
  • Company to file MGT-14 with Registrar of companies within 30 days of General meeting along with:
    • Certified true copy of special resolution.
    • Certified true copy of explanatory statement.
    • Certified true copy of altered Memorandum of Association and Articles of Association.
  • Draft an application for conversion of public company into private company or private company to public company (as the case may be)which includes:
    • Date of Board Meeting at which proposed alteration took place.
    • Date of General meeting
    • Reason for conversion
    • Effects of such conversion on shareholder/creditors/debenture holder/deposit holder and other persons concerned.
  • Prepare a list of creditors/list of debenture holders along with an affidavit verifying by professional.
  • Company will give an advertisement of application at least 21 days before filling an application, in form INC-25A in vernacular newspaper and in a English newspaper.
  • Company will give notice, at least 21 days before filling an application, to Creditors,Registrar of companies, Regional Director and other regulatory authorities.
  • Where no objection has been received from any person in response to the advertisement or notice referred above and the application is complete in all respects, the Regional director shall pass an order approving the application within 30 days from the date of receipt of application.
  • Company shall file the order conveyed by the Regional Director with the Registrar in form INC-28 within 15days from the date of receipt of approval along with fees .
 
     
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