Summary: Converting a private limited company into a public limited company under the Companies Act, 2013 involves several steps and regulatory requirements. The process begins with a board meeting where resolutions are passed to increase the number of directors and, if needed, authorize an increase in capital. An Extraordinary General Meeting (EGM) is then held to obtain shareholder approval for altering the Articles of Association and to approve the conversion. Following the EGM, necessary forms such as MGT-14 and INC-27 must be filed with the Registrar of Companies (ROC), along with required attachments including resolutions and altered documents. Post-conversion, the company must update its PAN, stationery, bank details, and inform relevant authorities. This transition allows the company to benefit from a wider capital base but requires meticulous adherence to legal procedures to ensure compliance and effective implementation.
This brief writes 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 from the date of receipt of the approval of the Registrar (CPC) through the change of name would become effective on the issue of fresh Certificate of Incorporation.
REGULATORY REQUIREMENTS:
- Applicable Section(s)
Section 14 of the Companies Act, 2013
- Applicable Rule(s)
Rule 33 of the Companies (Incorporation) Rules, 2014
- Note
A private company which has two directors, on conversion to public company appoint one more director to comply with the minimum requirement of three directors. Similarly if a company has less than seven members, on conversion to public company, increase the number of members to seven members.
PROCEDURE/STEPS FOR CONVERSION OF PRIVATE COMPANY INTO PUBLIC COMPANY
| S. No. | STEPS | ACTION |
| A. | BOARD MEETING | |
| Notice of Board Meeting | Issue Notice in accordance with the provisions of section 173(3) of the Companies Act, 2013 read with SS-1, for convening a meeting of the Board of Directors. | |
|
Agenda of Meeting
|
Pass Board resolution for increase in No. of Directors. (Minimum 3 Directors)
Pass a board resolution to get in principal approval of Directors for increase in authorized capital of the Company, if required. Fix date, time and place for holding Extraordinary General meeting (EGM) to get approval of shareholders, by way of Special Resolution, for alteration in Article of Association to be in line with Section 27(1) and for conversion of the Company. 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 read with SS-2; To authorize the Director or Company Secretary to issue Notice of the Extra-ordinary General meeting (EGM) as approved by the board. |
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| B. | Notice of General Meeting: | Provisions of the Section 101 of the Companies Act 2013 read with SS 2 provides for issue of notice of EGM in writing to below mentions at least 21 days before the actual date of the EGM :
> All the Directors. > Members > Auditors of Company |
| C. | Convene General Meeting: |
|
| D. | ROC form filing | For alteration in Article of Association for conversion of private company in public Company under section 14, forms will be filed with Registrar of CPC. |
| 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 |
|
| ATTACHMETN:
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. vi. Attendance Sheet of EGM. |
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| 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 | ||
| E- Form INC.27 | Accordingly, an Application for conversion of a private company into a public company is required to be filed in Form INC.27 to the ROC CPC, 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 |
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| Note:
Some ROC require following further documents in INC-27. i. Affidavit from Director or MD or WTD stating following: √ Letter of no objection have been obtained from all creditors /Debentures holders. √ No demand from Sales Tax or Income Tax or Excise is pending ii. Certified list of Creditors of the Company as on date of EGM. iii. Certified list of Members of the Company as on date of EGM. iv. Proof of filing of statutory report with ROC. v. List of cases pending before any court of Law where company is a party. |
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| E- Form DIR -12 | File a return containing the particulars of appointment of director with ROC within 30 days form appointment in general meeting in which director appointed | |
| 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. | ||
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| 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 Excise and sales tax etc about the status change |
| 5. | Printed copy of new MOA & AOA. |
SAMPLE
SPECIAL RESOLUTION:
ITEM NO.-1
Conversion of Private into public company Company into Private Limited Company
To consider and if thought fit, to pass with or without modification(s), the following Resolution as a Special Resolution:-
“RESOLVED THAT pursuant to the provision of section 14 and other applicable provisions, if any, of the Companies Act, 2013, the consent of the Shareholders of the Company be and is hereby accorded to convert the Company from “Private Limited” to “Public Limited” and consequently the name of the Company be changed from Article of As by deleting the word (PRIVATE) before (LIMITED), wherever appears in the Article of Association of the Company.
RESOLVED FURTHER THAT Mr… Director of the Company be and is hereby authorised on behalf of the Company, to do all such acts, deeds, matters and things as deemed necessary, proper or desirable and to sign and execute all necessary documents, application and returns for the purpose of giving effect to the aforesaid resolution along with filing of necessary e forms with Registrar of Companies, (Jurisdiction)”
ITEM NO.-2
To modify the Memorandum of Association as per Companies Act, 2013
To consider and if thought fit, to pass with or without modification(s), the following Resolution as a Special Resolution:-
“RESOLVED THAT pursuant to the provisions of Section 13(1) and (9) and all other applicable provisions, if applicable, of the Companies Act, 2013 read with the rules framed, the existing clause III(B) and III(C) of Memorandum of Association ne and are hereby deleted and new clause III(B) of Memorandum of Association be and is hereby inserted as per new Companies Act, 2013 as MATTERS WHICH ARE NECESSARY FOR FURTHERANCE OF THE OBJECTS SPECIFIED IN CLAUSE III(A) of the Memorandum of Association of the company. The new clause III(B) will be read as follows:
EXPLANATORY STATEMENT PURSUANT TO SECTION 102 OF THE COMPANIES ACT, 2013
ITEM NO. 1
The Company is being converted into a private company now. The company was incorporated as Private Limited Company but by virtue of Section 43(a) of the Companies Act, 1956 it was converted into a Limited Company. Since Company has very small numbers of shareholders and company is in no need of more funding from capital and in the interest of shareholders and stakeholders, it would be better to convert company into a Private Company and company can work effectively as a Private Limited Company so it is being proposed to convert into a Private Limited Company since it has not much shareholders and its funds requirements are low.
Moreover conversion into a Private Company shall not affect any debts, liabilities, obligations or contracts incurred or entered into, by or on behalf of the company before conversion and such debts, liabilities, obligations and contracts may be enforced in the manner as if such conversion had not been done.
The company is being converted into a Private Limited Company now and a new set of Articles of Association as applicable to a Private Company is being adopted.
The Directors recommend the Resolution for Member’s approval as a Special Resolution
None of the directors or KMP and their relatives is concerned or interested financially or otherwise in passing of this resolution.
ITEM NO. 2
The ancillary objects in the Clause III(B) of the Memorandum of Association are being changed with the requirements of Companies Act, 2013 and new set of MATTERS WHICH ARE NECESSARY FOR FURTHERANCE OF THE OBJECTS SPECIFIED IN CLAUSE III(A) are being adopted.
The Directors recommend the Resolution for Member’s approval as a Special Resolution
None of the Directors or key managerial personnel or any relative of any of the Directors of the Company or the relatives of any key managerial personnel is, in anyway, concerned or interested in the above resolution.
SAMPLE
BOARD RESOLUTION
(for conversion of a private company into a public company)
“RESOLVED THAT pursuant to the provision of section 14 and any other applicable provisions, if any of the Companies Act, 2013, and subject to the approval of the members of the company at the General Meeting, the consent of the Board of Directors of the company, be and is hereby accorded, for conversion of the private company into Public Limited Company and subsequently the name of the Company is hereby changed from………. to…….. by deletion of the word “Private” from the name of the Company.
FURTHER RESOLVED THAT the word “Private” wherever appearing in the Article of
Association of the Company and Memorandum of Association of the Company be and is hereby deleted. THAT, pursuant to the provision of section 100 and other applicable
FURTHER RESOLVED provisions of the Companies Act, 2013 read with applicable Rules, the consent of the Board of Directors of the Company, be and is hereby accorded, to convene Extraordinary General Meeting of the Company on…….. …………………………….. to get approval of members for conversion of private company into public company.
FURTHER RESOLVED that Mr……… Managing Director of the Company, be and is hereby authorized to make an application to the Registrar of Companies for change of status of the company and to do all such acts, deeds and things as may be required to give effect to this resolution”
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Author – CS Divesh Goyal, GOYAL DIVESH & ASSOCIATES Company Secretary in Practice from Delhi and can be contacted at [email protected]).
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