Considering the relaxations provided to a Private Limited Company, a large number of Public Limited companies choose to transform themselves into Private Limited companies. As per the Section 13 and 14 of the Companies Act, 2013, and rule no. 33 of companies’ rules 2014, a Public Limited Company can be converted into a Private Limited Company.
The Public Limited Company needs to approve a special resolution to get shareholder’s approval in a general meeting. Moreover, it is clearly mentioned in the Section 14(1) of the Companies Act, 2013 that any such conversion cannot be processed without seeking the approval of Central Government.
The company should organize a board meeting in which the resolution for conversion of public company to private company by Board of Directors need to be presented and discussed. In the same meeting, a director should be appointed to take necessary action to comply with the provisions of the Companies Act 2013.
Conversion Procedure of Public Company into Private Limited Company
Board Meeting – According to the Section 173(3) of the Companies Act, 2013, a Board meeting needs to be conducted with the following agenda:
1. Clear a board resolution to seekthe approval of Directors for conversion of a public company into a private company by modifying the AOA subject to the approval of Central Government;
2. Decide on date, time and place for conducting Extraordinary General meeting (EGM) to seek approval of shareholders, by way of Special Resolution, for conversion of a public company into a private company.
3. To approve notice of EGM along with Agenda and Explanatory Statement to be annexed to the notice of General Meeting as per section 102(1) of the Companies Act, 2013;
4. To authorize the Director or Company Secretary to issue Notice of the Extra-Ordinary General meeting (EGM) as approved by the board.
Notice of General Meeting – As per the provisions of the Section 101 of the Companies Act, 2013, the notice of EGM should be sent at least 21 days before the actual date of the EGM to all the Directors, members and auditors of the company.
Convene a General Meeting – Check the Quorum.
Check whether auditor is present, of not. Then Leave of Absence if Granted or Not.
Pass Special Resolution.[Section-114(2)] to seek shareholders’ approval for Conversion of Public Limited Company into Private Limited Company along with alteration in articles of association.
Approval of Alteration in MOA & AOA.
ROC Form Filing - For alteration in Article of Association for conversion of public company in Private Company under section 14, few E-forms will be filed with concerned Registrar of Companies at different stages as per the details given below
1. E- Form MGT.14
As per Section 117(3) Copy of this special resolution is required to be filed with concerned ROC through filing of form MGT.14 within 30 days of passing special resolution in the EGM.
Notice of EGM
i. Notice of EGM along with copy of explanatory statement under section 102;
ii. Certified True copy of Special Resolution;
iii. Altered memorandum of association;
iv. Altered Articles of association
v. Certified True copy of Board Resolution may be attached as an optional attachment.
It is important to note that first you need to file the form MGT.14 as SRN No. of form MGT.14 will be used in form INC.27. Hence, an Application for conversion of a public company into a private company is required to be filed in e-Form INC.27 to the ROC concerned, with all the necessary annexure and with prescribed fee.
Attachment
i. It is mandatory to attach Minutes of the member’s meeting where approval was given for conversion and altered articles of association.
ii. No need to attach copy of order of Competent Authority.
iii. Altered Articles of Association.
iv. Other information if any can be provided as an optional attachment
Note
ROC require following further documents in INC-27.
i. Affidavit from Director or MD or WTD stating following:
ii. That Company was never listed with any stock exchange;never it accepted any deposit;
iii. Letter of no objection have been obtained from all creditors /Debentures holders.
iv. No demand from Sales Tax or Income Tax or Excise is pending
v. Copy of certificate of Commencement of Business.
vi. Certified list of Creditors of the Company as on date of EGM.
vii. Certified list of Members of the Company as on date of EGM.
viii. Proof of filing of statutory report with ROC.
ix. List of cases pending before any court of Law where company is a party.
If ROC satisfied then ROC shall close the former registration and issue fresh certificate of incorporation, after registering the documents submitted for change in class of company.
After the completion of conversion procedure, a new Certificate of Incorporation will be issued mentioning the approval of conversion from Public Limited to Private Limited.
The process of conversion is quite cumbersome and quite time consuming. At Trademark Bazaar, we strive bring down the complexities associated with the conversion of Public Limited Company to Private Limited Company. From explaining the entire conversion process to lend a helping hand at every stage of conversion, our professionals leave no stone unturned to ensure smoother conversion process from start till end.
