Conversion of Private Limited Co. into Public Limited Co - Series 395



Conversion of
Private Limited Co. into
Public Limited Co.

Short Summary:

This brief write up an attempt has been made to unlock the technicalities related to Conversion of Private Company into Public Company prescribed under Companies Act, 2013. I believe that the procedure for Conversion of Private Limited Company into Public Company along with sample resolutions discussed through this article would be of some help for you all.

Conversion of status of company from private to public would become effective form the date of receipt of the approval of the Registrar through the change of name would become effective on the issue of fresh Certificate of Incorporation.

The Companies Act, 2013 was expected to simplify the provisions but on the contrary it brought lot of restrictions on doing business. Therefore the private companies are converting themselves into public limited company.

REGULATORY REQUIREMENTS:

The procedure for conversion from one company to the other is expounded within the Act with certain statutory requirements such as alteration of the Memorandum of Association (MOA) and Articles of Association (AOA) of the company.

Legal Provisions related to Conversion of Private Company into Public Company are given in Section 18 and 14 of the Companies Act, 2013 read with Rule 33 of Companies (Incorporation) Rules, 2014.

As per Section 13 and Section 14 of the Companies Act 2013 read with Rule 33 of Companies (Incorporation) Rules, 2014. A private company can be converted into the public company only after obtaining approval of shareholders by way of passing of special resolution in general meeting.


Relevant Sections & Rules of the Act:

1.      Section 13: It provides for alteration of memorandum.
2.      Section 14: It provides for alteration of articles.
3.      Section 18: It allows an existing Company to convert itself as a company of other class under this Act by alteration of memorandum and articles of the company in accordance with the provision of chapter II of the Act.
4.      Rule 33 of Companies (Incorporation) Rules, 2014: INC-27 for Conversion of Public Company into Private Company.
  
Process for Conversion

First Step:

STEP – I: Convey Board Meeting of Directors: (As per section 173 and SS-1)
To Pass a board resolution to get in principal approval of Directors for conversion of a private company into a public company by altering the AOA subject to the approval of Central Government (Power of Central Government assigned to ROC).


STEP –II: Held Board Meeting: (As per section 173 and SS-1)

§  To consider In-principal approval for conversion of Private Company into Public Company by altering Articles.

§  Get Approval to Alteration in Article of Association and recommending the proposal for members' consideration by way of special resolution.

§  Fixing the date, time, and venue of the general meeting and authorizing a director or any other person to send the notice for the same to the members.

§  To approve Notice of EGM along with explanatory statement to be annexed with the notice as per Section 102(1) of the Act.


STEP- III: Issue Notice of General Meeting: (Section 101)

Notice of EGM shall be given at least 21 days before the actual date of EGM. EGM can be called on Shorter Notice with the consent of atleast majority in number and ninety five percent of such part of the paid up share capital of the company giving a right to vote at such a meeting:

§  All the Directors.
§  Members
§  Auditors of Company

The notice shall specify the place, date, day and time of the meeting and contain a statement on the business to be transacted at the EGM


Second Step:

STEP- IV: Hold General Meeting: (Section 101)

§  Check the Quorum.
§  Check whether auditor is present, if not. Then Leave of absence is Granted or Not. (As per Section- 146).
§  Pass Special Resolution.[Section-114(2)]
§  Approval of Alteration in AOA for conversion of Private Company into Public Limited Company
§  Approval of alteration in Memorandum of Association.


STEP- V: Filing of form with ROC: (Section 117)
File Form MGT-14 (Filing of Resolutions and agreements to the Registrar under section117) with the Registrar along with the requisite filing within 30 days of passing the special resolution, along with given documents:-

§  Certified True Copies of the Special Resolutions along with explanatory statement;
§  Copy of the Notice of meeting send to members along with all the annexure;
§  A printed copy of the Altered Article of Associations and Memorandum of Association.

Note: It is relevant to note that First you have to file form MGT.14 as SRN No. of form MGT.14 will be used in form INC.27


Third Step:
File Form INC-27 with the Registrar of Companies within 30 days from date of order of NCLT- along with given documents:-

§  Minutes of the member’s meeting where approval was given for conversion and alteration of the articles of association.
§  Copy of SR
§  Copy of altered MoA & AoA
§  Any other information may be in optional attachment


Note:

Some ROC require following further documents in INC-27.

§  Affidavit from Director or MD or WTD stating following:
ü  Letter of no objection have been obtained from all creditors /Debentures holders.
ü  No demand from Sales Tax or Income Tax or Excise is pending
§  Certified list of Creditors of the Company as on date of EGM.
§  Certified list of Members of the Company as on date of EGM.
§  Proof of filing of statutory report with ROC.
§  List of cases pending before any court of Law where company is a party


ROC shall close the former registration and issue fresh certificate of incorporation, after registering the documents submitted for change in class of company along with order of NCLT.




POST CONVERSION REQUIREMETNS
1.     
Arrange new PAN No. of the company
2.     
Arrange new stationary with new name of the Company
3.     
Update company bank account details
4.     
Intimate all the concerned authorities like GST / Bank
5.     
Printed copy of new MOA & AOA.

(Author – CS Divesh Goyal, GOYAL DIVESH & ASSOCIATES Company Secretary in Practice from Delhi and can be contacted at csdiveshgoyal@gmail.com). Disclaimer: The entire contents of this document have been prepared on the basis of relevant provisions and as per the information existing at the time of the preparation. Although care has been taken to ensure the accuracy, completeness and reliability of the information provided, I assume no responsibility therefore. Users of this information are expected to refer to the relevant existing provisions of applicable Laws. The user of the information agrees that the information is not a professional advice and is subject to change without notice. I assume no responsibility for the consequences of use of such information. IN NO EVENT SHALL I SHALL BE LIABLE FOR ANY DIRECT, INDIRECT, SPECIAL OR INCIDENTAL DAMAGE RESULTING FROM, ARISING OUT OF OR IN CONNECTION WITH THE USE OF THE INFORMATION


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