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VS ASSOCIATES

Company secretaries

A boon for a Good Corporate Governance

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CCONVERSION OF UNLIMITED LIABILITY COMPANY INTO LIMITED
LIABILITY AND VICE –VERSA

1. Procedure to convert Unlimited Liability Company into Limited Liability Company:

  • Send notice to directors for convening board meeting as per section 173 and Secretarial standards SS-1.
  • Convene and hold 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 and pass a special resolution regarding conversion.
  • Company shall authorize a person to file MGT-14 and INC-27 with Registrar of Companies.
  • Company shall within seven days from the date of passing of the special resolution in a general meeting, publish a notice of such conversion in two newspapers, one in vernacular newspaper and one in English newspaper in form INC-27A.
  • Company shall within 45days of passing special resolution file an application with all relevant documents as are prescribed with the registrar of companies.
  • Registrar of Companies after considering the documents filed shall issue the Certificate of Incorporation in INC-11A upon grant of approval for conversion.

Procedure to convert Limited Liability company into Unlimited liability company:

  • 1- Send notice to directors for convening board meeting as per section 173 and Secretarial standards SS-1.
  • 2- Convene and hold BM:
    • (a) To consider the proposal of conversion.
    • (b) To approve amendment in Articles of association by Special resolution in General Meeting.
    • (c) To authorize director or any other eligible person to carry out the effect and all necessary acts required.
    • (d) 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.
    • (e) To consider the list of creditors/ debenture holders and amount thereof.
  • 3- Company to send notice to members u/s 101 and SS-2 for convening General Meeting.
  • 4- Duly convene and conduct General meeting and pass a special resolution regarding conversion.
  • 5- Company shall authorize a person to file MGT-14 and INC-27 with Registrar of Companies.
  • 6- Registrar of Companies on being satisfied shall issue a Certificate of Incorporation in INC-11B.
  • 7- An Unlimited Liability Company shall not be eligible for conversion into a company limited by shares in case –
    • Its net worth is negative, or
    • An application is pending under the provisions of the Companies Act, 1956 or the Companies Act, 2013 for striking off its name, or
    • The company is in default of any of its Annual Returns or financial statement under the provisions of the Companies Act, 1956 or the Companies Act, 2013, or
    • A petition for winding up is pending against the company, or
    • The company has not received amount due on call in arrears , from its directors, for a period of not less than six months from the due date, or
    • An inquiry, inspection or investigation is pending against the company.
  • The Registrar of Companies shall take a decision on the application filed under these rules within 30 days from the date of receipt of application and thereafter issue the certificate.

2. CONVERSION OF LIMITED LIABILITY PARTNERSHIP INTO COMPANY

CONVERSION OF LIMITED LIABILITY PARTNERSHIP INTO COMPANY

Procedure for conversion

Several businesses started in India as Limited Liability Partnership (LLP), may now wish to convert into a private limited company for more growth in business or for infusing equity capital. An LLP can be converted into a Pvt. Ltd. company as per the provisions contained in Section 366 of the Companies Act, 2013 and Company (Authorized to Register) Rules, 2014. However, there are various requirements which need to be satisfied for converting an LLP into a Private Limited Company, for instance, an LLP must have at least 7 partners, approval from all the partners is required, advertisement in newspaper is to be done in a local and a national newspaper, a No Objection Certificate (NOC) is required from the ROC where such LLP is registered which requires the following::


1. Consent of partners

The assent of all the partners in the form of resolution must be taken by conducting a meeting and authorization must be given to required partners for executing the steps papers, deeds, and documents required for registration.


2. Name approval

LLP have to apply for name availability through Part A of Spice+ Form ,company may run without the name change except the addition of private limited or limited word in conjunction to LLP(subject to availability of name as per guidelines of Companies Act.)

The name is valid for a period of 20 days.


3. Newspaper advertisement

The LLP shall publish an advertisement in a newspaper in English and in any Vernacular language in a format of form URC-2.

The objection can be made by any party within 21 days of the publication of the advertisement. The LLP needs to address all the objections, if any received.

The advertisement copy shall be served to the registrar where the LLP is registered.


4. Forms filling

The next step is to file form URG-1 along with SPICE+, INC -33, INC- 34 and AGILE form.

E-form URC-1: Application by company for registration under section 366 documents to be attached:

  • List showing the names, address and occupation of the persons named as members with details of shares held by them, if any
  • List showing the first directors of company along with their particulars.
  • Copy of LLP Agreement and Incorporation Certificate.
  • Statements of assets and liabilities of LLP supplemented by a certification of chartered accountant in practice, dated not earlier then 15 days of filing form no. URC-1 along with the financials of previous year.
  • Copy of latest income tax return of LLP
  • Undertaking of proposed directors signifying the oath of compilation with requirements of Indian stamp act,1899
  • Certification from a CA/CS/CWA certifying the compliance with all the provisions of Stamp act, to the extent applicable
  • Written consent/ no objection certificate from all secured creditors.
  • Written consent of majority of partners.
  • Publication of advertisement seeking public objections at least 21 days before filling form.

- E-form Spice+/INC-33/INC-34 and Agile :

In addition to URC-1 as linked form with all the attachments as required in normal course procedure of incorporation have to be filed.

  • Spice+ the basic details of the company and the directors are filled along with the details of PAN/Tan application.
  • DIR-2 declaration from first directors with the copy of id proof and residential address
  • Proof of Registered office.

- After filling of SPICE+ form, the applicant has to fill the e-form INC-33(MOA)

And INC-34 (AOA), stating the main objects and ancillary objects in MOA along with the details of the subscribers and their shareholding details.

- E-form AGILE(single window form)

Through this form one can obtain

  • GST Number
  • ESI/PF Registration
  • Opening of bank account
  • Professional Tax Registration

5. Submit all the forms on MCA portal and pay the requisite fee.

6. The registrar on being satisfied will issue Incorporation Certificate containing details of CIN, PAN, and TAN.


3. CONVERSION OF ONE PERSON COMPANY (OPC) INTO PUBLIC COMPANY OR PRIVATE COMPANY AND VICE VERSA.

CONVERSION OF ONE PERSON COMPANY (OPC) INTO PUBLIC COMPANY OR PRIVATE COMPANY AND VICE VERSA

Methods of conversion:

A. Voluntary conversion

  • 1. At least two years has been elapsed since Incorporation.
  • 2. Application in form INC-6
  • 3. Shall have to increase the number of shareholders and Directors to the requisite limit.

B. Mandatory conversion

  • 1. In case paid up capital exceeds Rs. 50lakhs and average annual turnover of preceding three years exceed two crores.
  • 2. Shall have to increase the number of shareholders and Directors to the requisite limit.

Procedure to convert OPC into Public or Private Company:

  • 1. One person company shall alter its Memorandum of Association and Articles of Association by passing a resolution as per section 122 to give effect to the conversion and to carry out such necessary changes.
  • 2. For converting OPC to a private company, OPC is required to have 2 directors and 2 members.
  • 3. For converting OPC to a public company, OPC is required to have 3 directors and 7 members.
  • 4. Company will file form INC-6 along with fees with ROC (for its conversion into private or public company company)along with attachments:
    • 1. Altered Memorandum of Association and Article of Association;
    • 2. Copy of Resolution;
    • 3. List of proposed members and its directors along with their consent;
    • 4. List of creditors;
    • 5. Latest audited Balance Sheet and Profit and Loss account.

On being satisfied that the requirements stated have been complied, Registrar of Companies shall approve the form and Issue the Certificate.

PROCEDURE TO CONVERT PRIVATE COMPANY INTO OPC:

  • 1. Private company (other than section 8 company)may convert itself into OPC by passing Special Resolution in General Meeting.
  • 2. Company before passing Special Resolution shall obtain NOC(no objection certificate) in writing from Members and Creditors.
  • 3. OPC shall file a copy of special resolution in MGT-14 with Registrar of Companies within 30 days from date of passing.
  • 4. Company shall file Form-6 for its conversion into OPC along with following attachments.
    • - List of members and list of creditors.
    • - Latest audited Balance Sheet and Profit and Loss accounts.
    • - Copy of NOC from secured creditors.

On being satisfied that the requirements stated have been complied, Registrar of Companies shall approve the form and Issue the Certificate.


4. CONVERSION OF SECTION 8 COMPANY INTO A COMPANY OF ANY OTHER KIND

CONVERSION OF SECTION 8 COMPANY INTO A COMPANY OF ANY OTHER KIND

Introduction:

Section 8 Company is formed to encourage and nourish certain acts of art, education, science, sports, religion, charity, social welfare, research, protection of environment or any other related objective. The sec 8 company does not pay any bonus or dividend to its members. The profits of this company are used towards achieving and promoting the objective of the company.

Procedure for conversion:

  • 1 Send notice to directors for convening Board Meeting as per section 173 and Secretarial Standards SS-1.
  • 2 Convene and hold BM:
    • 6 To consider the proposal of conversion.
    • 7 To approve amendment in Articles of association by Special resolution in General Meeting.
    • 8 To authorize director or any other eligible person to carry out the effect and all necessary acts required.
    • 9 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.
  • 3 Company to send notice to members u/s 101 and SS-2 for convening General Meeting
    • 4 Explanatory statements annexed to the notice of General Meeting:
      • - Reasons for opting for such conversion.
    • - Date of incorporation.
      • -Principal Objects
      • -Reasons as to why Objects cannot be carried on
      • -Altered Objects, if any along with reason
      • -Details of privileges enjoyed by the company.
      • -Details of Conversion and its impact on the members.
  • 10 Certified true copy of Special resolution in MGT-14 with Registrar of Companies.
  • 11 Company shall file an application in form INC-18 with Regional Director along with MGT-14.
  • 12 Company shall within a week of filling INC-18 publish a notice in at least once in vernacular newspaper and at least once in English newspaper and on website of the company.
  • 13 Company shall send a notice along with copy of publication, copy of application , and other attachments to:
    • - Regional Director in Form INC-19.
    • - Chief commission of Income Tax
    • - Income Tax Officer
    • - Chief Secretary of State
    • - Department/Authority of Central Government/State Government.
    • - Other regulatory authorities.
  • Such authorities may make representations, if any, within 60 Days. A copy of proof of serving such notice shall be included in application.
  • 14 Board of Directors shall give declaration to the effect that no portion of the Income or Property of the Company is being paid or transferred, directly or indirectly, by way of dividend or bonus or otherwise to the persons or members.
  • 15 Where a company taken any privileges, exemption, benefits grant from any authority then No Objection Certificate must be obtained from such respective authority and filled with Regional Director along with application.
  • 16 On receipt of application Regional Director may order approving such Conversion provided:
    • - Company shall give up all special exemptions, privileges under section 8.
    • - If company acquired any immovable property free of cost or at concessional cost, may be required to pay off the difference amount.
    • - Any accumulated profit be first utilized to settle all outstanding dues and liabilities, if any amount remains will be transferred to IEPF( Investor Education and Protection Fund account).
  • 17 After considering Regional Director may accept or reject the application after giving an Opportunity of being heard.
  • 18 On receipt of approval from Regional Director.
  • 19 Company shall duly convene and conduct General meeting pass Special Resolution to carry out amendments in Memorandum of Association, Articles of Association.
  • 20 Company shall file the certified copy of approval in form INC-20 with Registrar of Companies along with:
    • - Amended Memorandum of Association /Article of association.
    • - Declaration by Directors that all imposed conditions has been complied with.
  • 21 Registrar of Companies on being satisfied with the documents filled may issue a Certificate of Incorporation.

5 CONVERSION OF PRIVATE COMPANY TO PUBLIC COMPANY

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 there under 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

  • 1 Members of the company shall approve the conversion of company into public company by special resolution.
  • 2 Name clause of memorandum needs to be amended to exclude the word ‘Private’.
  • 3 Increase the number of members to seven or more.
  • 4 Amendments to the articles of the company for removal of restrictive provisions applicable to private company and are advisable to adopt a new set of articles applicable to a public company.
  • 5 Company has not defaulted in filling of annual returns or financial statements or any other documents due for filling with the registrar.
  • 6 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

  • 1 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.
  • 2 Name clause of memorandum needs to be amended to include the word ‘Private’
  • 3 Amendments to the articles of the company for insertion of restrictive provisions applicable to private company and are advisable to adopt a new set of articles applicable to a private company.
  • 4 Company has not defaulted in repayment of matured deposits or debentures or interest on deposits or debentures
  • 5 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:

  • 1 Send notice to directors for convening Board Meeting as per section 173 and Secretarial standards SS-1.
  • 2 Convene and held BM.
    • 1 To consider the proposal of conversion.
    • 2 To approve amendment in Articles of association by Special resolution in General Meeting.
    • 3 To authorize director or any other eligible person to carry out the effect and all necessary acts required
    • 4 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.
    • 5 To consider the list of creditors/ debenture holders and amount thereof.
  • 3 Company to send notice to members u/s 101 and SS-2 for convening General Meeting.
  • 4 Duly convene and conduct General meeting.
  • 5 Company to file MGT-14 with Registrar of companies within 30 days of General meeting along with:
    • a. Certified true copy of special resolution.
    • b. Certified true copy of explanatory statement.
    • c. Certified true copy of altered Memorandum of Association and Articles of Association.
  • 6 Draft an application for conversion of public company into private company or private company to public company (as the case may be)which includes:
    • a. Date of Board Meeting at which proposed alteration took place.
    • b. Date of General meeting
    • c. Reason for conversion
    • d. Effects of such conversion on shareholder/creditors/debenture holder/deposit holder and other persons concerned.
  • 7 Prepare a list of creditors/list of debenture holders along with an affidavit verifying by professional.
  • 8 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.
  • 9 Company will give notice, at least 21 days before filling an application, to Creditors, Registrar of companies, Regional Director and other regulatory authorities.
  • 10 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.
  • 19 Company shall file the order conveyed by the Regional Director with the Registrar in form INC-28 within 15 days from the date of receipt of approval along with fees.

Some Frequent Issues:

  • 1 Spacing issue-Kindly add proper space between the words wherever required.
  • 2 We are unable to open some pages like IPR, Conversion, NCLT Rules and Contact us (page) etc. under frequently used Services.

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