Introduction: If the promoter of the private company wants to expend the business of the company or they want to list the company on the SME Exchange or Mainboard of the any stock exchange. In such situation the promoters take a decision for conversion of the private company into public company. This article delves into the practical requirements, regulatory provisions, and pre-requisites outlined in the Companies Act, 2013. From alterations in articles to the conversion process and legal considerations, we explore the crucial aspects of this significant transformation.
Regulatory Provision in the companies Act. 2013
Section: 14. Alteration of Articles
(1) Subject to the provisions of this Act and the conditions contained in its memorandum, if any, a company may, by a special resolution, alter its articles including alterations having the effect of conversion of–
(a) a private company into a public company; or
(b) a public company into a private company:
Provided that where a company being a private company alters its articles in such a manner that they no longer include the restrictions and limitations which are required to be included in the articles of a private company under this Act, the company shall, as from the date of such alteration, cease to be a private company:
[4[1[Provided further that any alteration having the effect of conversion of a public company into a private company shall not be valid unless it is approved by an order of the Central Government on an application made in such form and manner as may be prescribed:
Provided also that any application pending before the Tribunal, as on the date of commencement of the Companies (Amendment) Ordinance, 3[2019], shall be disposed of by the Tribunal in accordance with the provisions applicable to it before such commencement.
*(2) Every alteration of the articles under this section and a copy of the order of the 4[2[Central Government]] Tribunal approving the alteration as per sub-section (1) shall be filed with the Registrar, together with a printed copy of the altered articles, within a period of fifteen days in such manner as may be prescribed, who shall register the same.
(3) Any alteration of the articles registered under sub-section (2) shall, subject to the provisions of this Act, be valid as if it were originally in the articles.
Section 18 of the Companies Act, 2013
(1) A company of any class registered under this Act may convert itself as a company of other class under this Act by alteration of memorandum and articles of the company in accordance with the provisions of this Chapter.
(2) Where the conversion is required to be done under this section, the Registrar shall on an application made by the company, after satisfying himself that the provisions of this Chapter applicable for registration of companies have been complied with, close the former registration of the company and after registering the documents referred to in sub-section (1), issue a certificate of incorporation in the same manner as its first registration.
(3) The registration of a company under this section 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 registration had not been done.
Pre-requisites for Conversion of the Private Company into Public Company.
1. Minimum members should be 7 before going for conversion of public company.
2. Demat of securities is mandatory for the public companies after the conversion of company from private to public company.
3. Minimum Directors should be 3 (THREE)
4. Surrender all the GST registration in name of the Private Limited company.
5. Surrender of the PAN of the Company.
6. Surrender all the registration which is obtained in the name of private Limited Company.
Process of the Conversion of Private Limited Company into The Public Limited Company.
1. Call the Board Meeting: The Directors of the Company will call a meeting of Board of Directors to discuss and consider the following agenda.
- The Board of Directors will discuss the matter related to conversion of private Limited Company to Public Limited Company.
- To fix the day, date and time of the Extra-ordinary general meeting.
- To authorize to any director of the company to issue of the notice of the EGM.
2. Call the EGM:
In the Extra-ordinary General meeting will following Special resolution will be passed:
- Special Resolution for the alteration in the MoA and AoA of the Company.
- Special Resolution for the Change the name (Delete the word private from the name of the Company).
3. File the Form MGT-14 As required in the Section 117 of the Companies Act, 2013 the special resolution is filed with the Registrar of the Companies. 2013 with in 30 days of the passing of the resolution. Along with the following attachments.
- Alerted copy of the article of association
- Alerted copy of the Memorandum of Association
- Notice of the General meeting along with the copy of Special resolution.
4. File the Form e-form INC-27– As mandated under the per rule 33 of the Companies (Incorporation) Rules, 2014 the company shall file the e-form INC-27 with in 15 days from the date of passing of special resolution along with the following attachment-
- Notice of General meeting along with the copy of special resolution.
- Alerted MoA
- Alerted AoA
- Details of Directors Promoters and Promoters.
- Minutes of the General meetings.
Conclusion: Converting a private limited company into a public limited company requires meticulous planning and adherence to regulatory provisions. As outlined in the Companies Act, 2013, the process involves altering the memorandum and articles, obtaining necessary approvals, and filing the required forms. The pre-requisites, such as minimum members, directors, and demat of securities, play a pivotal role.
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Feel free to contact the author for further clarification at 8279255794 or via mail at [email protected]@gmail.com. The author is the founder of Piyush Goyal & ASSOCIATES (Practicing Company Secretaries Firm) based in Jaipur.
CS Piyush Goyal is an associate member of the Institute of Company Secretaries and the founder of Piyush Goyal & Associates (Practicing Company Secretaries Firm) based in Jaipur. I am a competent professional having great post-qualification experience in GST, Income tax, Corporate Law, Labour law, SEBI, RBI etc. As a dedicated Company Secretary with a comprehensive understanding of corporate governance and regulatory compliance, I have experience in effectively managing corporate legal and administrative functions. I have played a pivotal role in ensuring companies adhere to statutory requirements, maintain ethical practices, and foster transparent operations. We, at Piyush Goyal & Associates are committed to upholding the highest standards of corporate integrity and contributing to the long-term success of the organizations we serve.
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