Conversion of Public Company Into Private Company is governed by following Provisions of Companies Act and Rules-
1) Relevant Section and rules for Conversion:
a. Section 13: Alteration of Memorandum of Association.
b. Section 14: Alteration of Articles of Association.
c. Section 18: It provides the manner in which an existing Company can 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.
d. Rule 41 of Companies (Incorporation) Fourth Amendment Rules, 2018: Rule 41 deals with Application to be filed under Section 14 for conversion of public company into private company.
Checklist For Conversion of Public Company Into Private Company
| S. No | Particulars | Attachment/Agenda |
| 1 | Convene a Board Meeting | Agenda:
1. Approval for Conversion of Company. 2. Alteration of MOA and AOA. 3. Fix date, time and place of EGM. |
| 2. | Convene a EGM | Agenda:
1. Approval for Conversion of Company. 2. Alteration of MOA and AOA. 3. Fix date time of EGM. |
| 3. | File MGT-14 (within 30 days) | Attachment:
1. Copy of BM Resolution CTC 2. Notice of EGM & Explanatory statement. 3. Copy of EGM Resolution CTC. 4. Altered MOA & AOA. |
| 4. | Convene a Board Meeting | Agenda:
1. BR for Authorisation for conversion 2. Affidavit for execution. |
| 5. | Newspaper Advertisement in INC-25A | Time gap between Adv. and RD-1 Form 21 days. |
| 6. | Notice to Debenture holders, Creditors, ROC and RD. | Time gap between such Notice and RD-1 form filing shall be atleast 21 days. |
| 7. | File form RD-1 (within 60 days from the date of passing of SR) | Attachment:
1. Signed Copy of Application 2. Draft copy of altered MOA & AOA 3. Copy of Minutes of EGM 4. Copy of Signed ADVERTISEMENTS 5. Declaration by director : a) The company limits the number of its members to TWO HUNDRED. b) Non-acceptance of deposit c) NO NON-COMPLIANCE of sections 73 to 76A, 177, 178, 185, 186 and 188 d) NO RESOLUTION is pending to be filed under Section 179 (3). e) Non Listing of company to STXs or complied with. 6. List of creditors and debenture holders. 7. Affidavit by Director about true and fair list of creditors and debenture holders. 8. Proof of Serving the Notice to all 9. Power of Attorney or Memorandum of |
| 8 | INC-28 (within 15 days from RD order) | Attachment: Copy of RD order |
| 9 | INC-27 (within 30 days from RD order) | Attachment: Copy of RD order |
Notes:
1) The conversion of Public Company into Private Company makes it easier to meet compliance and regulatory provisions and exercise greater control. These following exemptions made available through the notification to private limited:
1. Related party transactions
2. Share capital
3. Public deposits
4. Meeting Requirements
5. Agreements and resolutions
6. The auditor eligibility
7. Directors
8. Power of the board
9. Senior Management Appointment
10. Others.
2) Exemptions to private Company
a) Exemptions to Private Companies U/s. 462 of CA 2013
b) New Exemptions to Private Companies under section 462 of CA, 2013
3) A business entity may exercise the options for conversion and re-conversion, as and when it seems appropriate. The choice amongst the various forms of business entities depends upon many aspects such as objects of the proposed business, likely number of members, amount to be invested, scale of operations, state control, legal requirements, tax implications, advantages of one form of business over another, etc.
4) Conversion of Public Company into Private Company is time taking and needs to adhere to the various formalities prescribed in Companies Act, 2013. The process of Conversion is long-lasting and lengthy.
Post Conversion Steps:
1. Use the copy of altered Memorandum and Articles of the Company.
2. Make all requisite changes in the signboards, Letter heads, Books Rubber Stamps, Bill Books, Common Seal, visiting cards and other documents and items.
3. Make the changes in PAN, TAN, GST Portal, Bank Accounts.
4. Intimate the changes to Banks, Income Tax Department, PF Department, ESI Department and all other departments.
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Disclaimer: The views and opinion expressed in this article are based upon my understanding and do not necessarily be authentic.
Author Bio
A Company, who was a listed Limited company, has now just been delisted by exit offer completed and certificate of delisting received, can it apply for conversion into a Private Limited Company