As you all are aware that after constitution of National Company Law Tribunal (NCLT) and National Company Law Appellate Tribunal (NCLAT), Central Government has notified NCLT Rules, 2016 w.e.f. 21st July, 2016.
By making these rules and constitution of aforesaid authority, we have to take approval from tribunal i.e. NCLT for conversion of a Public Company into a Private Company as per Section 14 of the Companies Act, 2013 (the Act) . A copy of order of NCLT shall be filed with the Registrar together with altered articles. Legal provisions related to Conversion of a Public Company into a Private Company are given in Section 14 & 18 of the Act read with Rule 33 of Companies (Incorporation) Rules, 2014. E-form INC-27 is required to be filed for this conversion pursuant to Section 14 of the Act and Rule 33 of Companies (Incorporation) Rules, 2014. The special resolution (SR) is required to be passed by postal ballot, if Company has more than 200 members pursuant to section 110 of the Act read with Rule 22 (16)(b) of the Companies (Management and Administration) Rules, 2014.
Keeping in view of the new process under NCLT for conversion of a Public Company into a Private Company and as the Ministry of Corporate Affairs (MCA) has provided various exemptions to Private Company under various provisions of the Act, many Public Companies want to convert themselves into Private Company. I have prepared a checklist for process of conversion of a Public Company into a Private Company, considering provisions of the Act as well as NCLT Rules, 2016 along with sample Board/General Meeting Resolution(s) & Petition format and other relevant Format of NCLT Form. Hope this article would be of some help for you all.
Relevant Sections & Rules of the Act:
Rule 68 of the NCLT Rules, 2016: Petition under the second provision to Section 14(1) of the Act for the conversion of a public company into a private company, shall, not less than three months from the date of passing of special resolution, be filed to the Tribunal in Form No. NCLT. 1 and shall be accompanied by such documents as are mentioned in Annexure B.
Annexure B: following documents are required to be attached with petition for conversion of Public Company into a Private Company under Section 14(1) of the Act:
Rule – 68(3) of the NCLT Rules, 2016 : There shall be attached to the application, a list of creditors and debenture holders, drawn up to the latest practicable date preceding the date of filing of petition by not more than two months, setting forth the following details, namely:-
(a) the names and address of every creditor and debenture holder of the company;
(b) the nature and respective amounts due to them in respect of debts, claims or liabilities;
(c) in respect of any contingent or unascertained debt or any such claim admissible to proof in winding up of the company, the value, so far as can be justly estimated of such debt or claim:
Provided that the petitioner company shall file an affidavit, signed by the company secretary of the company, if any, and not less than two directors of the company, one of whom shall be a managing director, where there is one, to the effect that they have made a full enquiry into the affairs of the company and, having done so, have formed an opinion that the list of creditors is correct, and that the estimated value as given in the list of the debts or claims payable on a contingency or not ascertained are proper estimates of the values of such debts and claims and that there are no other debts of , or claims against, the company to their knowledge.
As per Rule 68(5) of the NCLT Rules, 2016 the company shall at least fourteen days before the date of hearing :
(a) Advertise the petition in Form NCLT-3A, at least once in a vernacular newspaper in the principal vernacular language of the district in which the registered office of the company is situate, and at least once in English language in an English newspaper circulating in that district. (read with Rule 35 of NCLT Rules, 2016)
(b) serve, by registered post with acknowledgement due, individual notice in Form NCLT. No. 3B to the effect set out in sub-rule (a) on each debenture-holder and creditor of the company; and
(c) serve, by registered post with acknowledgement due, a notice together with the copy of the petition to the Central Government, Registrar of Companies and to the Securities and Exchange Board of India, in the case of listed companies and to the regulatory body, if the company is regulated under any other Act.
Some provisions of Rule 35 of NCLT Rules, 2016:
Provided that the affidavit shall be accompanied with such proof of advertisement or of the service, as may be available.
CHECKLIST FOR CONVERSION OF A PUBLIC COMPANY INTO A PRIVATE COMPANY
|Steps||Particulars||Corresponding Section/Rule, Provisions & Documents required|
|1||Issue Notice of Board Meeting||Section 173(3) of the Act & Secretarial Standard-1 (SS-1)
2. Main Agenda of Meeting:
ü To consider In-principal approval for conversion of Public Company into Private Company by altering Articles.
ü To fix date, time and place for holding Extra-ordinary General Meeting (EGM) for approval of Shareholders by way of SR for conversion of Public Company into Private Company by altering Articles.
ü To approve Notice of EGM along with explanatory statement to be annexed with the notice as per Section 102(1) of the Act.
ü To authorise Company Secretary/Director to issue notice of EGM.
ü To authorise Company Secretary in practice/ practising Chartered Accountant/practising Cost Accountant, to enter appearance.
|2||Holding of Board Meeting||Section 173 of the Act & SS-1
Pass all resolutions given in Agenda
|3||Issue Notice of (EGM) for passing (SR)||Sections 100,101, 102 of the Act & Secretarial Standard-2 (SS-2)
Send notice along with Explanatory Statement to all Members, Directors and the Auditors of the company accordance with the rovisions of Section 101 of the Act.
|4||Holding of EGM of the Members of the Company||Section -100 of the Act
Passing SR by the Members of the Company for In-principal approval for conversion of Public Company into Private Company along with altering Articles.
|5||File E-form MGT-14 within 30 days of passing SR||Section 117 of the Act
Attachment in E-form MGT-14
1. Certified True copy of Special Resolution along with copy of explanatory statement
2. Altered memorandum of association
3. Altered Articles of association
4. Notice of EGM
5. Any other information may be in optional attachment
|6||Filing of petition to NCLT for order (not less than three months from date of passing SR)||Rule 68 of NCLT Rules, 2016
1.Petition in Form NCLT-1 along with following attachments:
ü Copy of MOA & AOA
ü Copy of documents showing that the company cease to a public company
ü Affidavit verifying the petition
ü Bank draft evidencing payment of application fees
ü Memorandum of appearance with copy of Board Resolution or the executed vakalatnama (Form NCLT-12)
2. Other Documents:
ü Name and address of every creditors (date as on not more than 2 months from the date of filing of petition)
ü Nature and respective amounts due to them in respect of debts, claims or liabilities.
ü Affidavit proving that the list of creditors is correct.
3. At least 14 days before the date of hearing:
ü Advertise the petition in Form NCLT-3A at least once in a vernacular newspaper in the principal vernacular language of the district in which the registered office of the company is situate, and at least once in English language in an English newspaper circulating in that district.
ü Send by registered post with acknowledgement due, individual notice in form NCLT 3B to every creditor.
ü Send by registered post with acknowledgement due, notice together with copy of petition to the CG, RoC and other applicable regulatory authority.
|7||File E-Form INC-27 to the RoC with in 30 days from the date of receiving of order of NCLT||Section 13, 14, 18 and rule 33 of Companies (Incorporation) Rules, 2014
Attachment to the E-form INC-27:
ü Minutes of the member’s meeting where approval was given for conversion and alteration of the articles of association.
ü Copy of SR
ü Copy of altered MoA & AoA
ü Order of NCLT
ü Any other information may be in optional attachment
|8||Fresh CoI||Issue Fresh Certificate of Incorporation by Registrar|
|9||Post conversion steps||Intimate to all concerned authorities, arragement of new PAN, update bank Accounts details, new stationery like new letter head, new rubber stamps etc.|
SAMPLE BOARD RESOLUTION:
Item: In-Principal approval for Conversion of Public Company into Private Company
RESOLVED THAT pursuant to provisions of Sections 13, 14 & 18 and other applicable provisions of the Companies Act, 2013, if any and the rules made thereunder, (including any modification and/or amendment thereof) and subject to the approval of the Members of the Company by way of Special Resolution and Central Government i.e. National Company Law Tribunal (NCLT) and any other regulatory authorities as may be necessary, the Board be and is hereby approved for conversion of the Public Company into Private Company from “_________________________LIMITED to ___________________________PRIVATE LIMITED” by addition of the word “PRIVATE” before the word “PUBLIC”.
FURTHER RESOLVED THAT a new set of Articles of Association as applicable to Private Company as placed before the Meeting be and is hereby approved and adopted by the Board.
FURTHER RESOLVED THAT Mr._____________(DIN:__________) Mr. ______________Directors of the Company and the Company Secretary of the Company be and are hereby severally authorized to make necessary application to the Registrar of Companies, NCT, Delhi & Haryana and to make petition before the National Company Law Tribunal (NCLT) for seeking approval for the aforesaid conversion and hereby authorised to sign and file all the eforms and other documents and do all such acts, deeds, things and matters as may be deemed necessary to give effect to this resolution.
SAMPLE GENERAL MEETING RESOLUTION:
Item: In-Principal approval for Conversion of Public Company into Private Company (SPECIAL RESOLUTION)
To consider and if thought fit, to pass with or without modification(s), the following Resolution as a Special Resolution:
RESOLVED THAT pursuant to provisions of Sections 13, 14 & 18 and other applicable provisions of the Companies Act, 2013, if any and the rules made thereunder, (including any modification and/or amendment thereof) and subject to the approval of the Central Government i.e. National Company Law Tribunal (NCLT) and any other regulatory authorities as may be necessary, consent of the Members be and is hereby granted/approved for conversion of the Public Company into Private Company from “_________________________LIMITED to ___________________________PRIVATE LIMITED by addition of the word “PRIVATE” before the word “PUBLIC”.
FURTHER RESOLVED THAT a new set of Articles of Association as applicable to Private Company as placed before the Meeting be and is hereby approved and adopted by the Members of the Company.
FORM NO. NCLT. 1
General Heading for Proceedings
Before the National Company Law Tribunal,
Bench, at ________
In the mater of the Companies Act, 2013
In the matter of …… Ltd: (Name of the Company)
Columns required for filing of Original Application/ Reply / Rejoinder / Interlocutory Application or filing of additional documents under directions of the Bench
i. Details of Original Application / Reply / Rejoinder/ Interlocutory Application
Particulars of the Petitioner / Applicant / Respondent and state whether company, whether petitioner or not.
(Name, description, father’s / husband’s name, occupation, capacity, i.e. quashareholder, qua depositor and address)
ii. Jurisdiction of the Bench:
The petitioner declares that the subject-matter of the petition is within the jurisdiction of the Bench
iii. Limitation: (If applicable)
The petitioner / applicant further declares that the petition is within the limitation laid down in section ……. of the Companies Act, 2013 (where applicable)
iv. Facts of the case are given below:
(Concise statement of facts in a chronological order, each paragraph containing as nearly as possible a separate issue, fact or otherwise.)
v. Relief(s) sought.
In view of the facts mentioned above, the petitioner/applicant / respondent prays for the following relief(s):
(Specify below the relief(s) sought explaining the ground for relief(s) and the legal provisions (if any) relied upon)
vi. Particulars of Bank draft evidencing payment of fee for the petition or application made:
Branch of the Bank on which drawn:
Name of the issuing branch:
Demand Draft No………
(Signature/Signature of Authorised signatory)
FORM NO. NCLT. 3A
Advertisement detailing petition
[see Rule 68 of NCLT Rules, 2016 ]
Company Petition/Application/Reference No ….. of …
Notice of petition
A petition/application/reference under section 14 of the Companies Act, 2013, for………………….. was presented by ……………………………. on the ……………………………. day of ….. 20 … , and the said petition is fixed for hearing before ………bench of National Company Law Tribunal on …. .20 …Any person desirous of supporting or opposing the said petition/application/reference should send to the petitioner’s advocate, notice of his intention, signed by him or his advocate, with his name and address, so as to reach the petitioner’s advocate not later than ‘two days before the date fixed for the hearing of the petition/application/reference. Where he seeks to oppose the petition/application/reference, the grounds of opposition or a copy of his affidavit shall be furnished with such notice. A copy of the petition/application/reference will be furnished by the undersigned to any person requiring the same on payment of the prescribed charges for the same.
(Advocate for petitioner) Address:
Form No. NCLT 3 B
Individual Notice of petition/ application to creditors, members, etc.
[see Rule 68 of NCLT Rules, 2016 ]
Sub: Notice of petition/ application filed under section 14 of Companies Act, 2013
Take notice that a petition/ application under section 14 of the Companies Act, 2013 dated…… was presented by………… (name of the company) before ………… Bench, National Company Law Tribunal, for………………… (state the purpose of the petition).
The said petition/ application has been accepted and is fixed for hearing before the Bench on ……………….If you desire to support or oppose the petition at the hearing, you should give notice thereof in writing to the undersigned so as to reach him/ it not later than …….. days before the date fixed for the hearing of the petition, and appear at the hearing in person or by your authorised representative.
Where such person seeks to oppose the petition/ application, the grounds of opposition or a copy of the affidavit shall be furnished with such notice.
A copy of the petition/ application will be furnished by the undersigned to any person requiring the same on payment of the prescribed charges for the same.
Name of the petitioner/ applicant (& his authorised representative, if any)
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