Checklist for conversion of Public Company into Private Company prescribed under Companies Act, 2013
As per Section 14(1) – for conversion of Public Company into Private Limited Company approval of Tribunal is required.
By Companies (Amendment) Ordinance, 2018, power of Tribunal has been transferred to Central Government. Therefore, after notification of ordinance Public Company can be converting into Private Company with approval of Central Government. MCA on 18th December, 2018 has published Companies (Incorporation) Fourth Amendment Rules, 2018. They shall come into effect from 18th December, 20181.
With these rules MCA amended Rule 41 ‘applicability under section 14 for conversion of Public Company into Private Company’ and power of Central Government assigned to Regional Director for approval of conversion of public limited company into private limited company. The brief procedure for conversion of a public limited company into private limited company as under;
|1.||Convene a board meeting
[Refer- Section 100, 173, SS-1]
|2.||Issue notice of general meeting in accordance with the provisions of Section 101, 102 and SS-2.|
|3.||Convene a general meeting and pass a special resolution for alteration of Memorandum and Article of Association of the Company for having the effect the conversion of Company into a Private Limited Company
[Refer- Section 14(1)]
|4.||Obtain approval of Company in general meeting by way of passing special resolution;
In case of a Listed Company or Company having more than 200 members; the said resolution shall be passed through postal ballot in accordance with section 110(1) read with rule 22(16)(b)of Companies (Management and Administration) Rules, 2014.
|5.||Ensure the recording of number of members present in the meeting and number of shares held by them who voted in:
Record the name of the members who voted against the resolution.
|6||Prepare and finalize the minutes of the general meeting in accordance with the provisions of section 118 and SS-2, within 30 days from the date of passing special resolution and obtained signature of chairman of the Company.|
|7.||File e-Form MGT-14 with the Registrar of Companies (ROC) within 30 days from the date of passing special resolution along with a copy of notice and certified copy of resolution and explanatory statement.
[Refer- Section 117]
|8.||Convene another Board Meeting for the purpose of ;
|9.||Make an application with the Regional director in e-Form RD-1 within 60 days from date of passing special resolution, setting out the following particulars;
1. the date of Board Meeting at which the proposal for alteration of Memorandum and Articles was approved;
2. the date of the general meeting at which the proposed alteration was approved;
3. reason for conversion into a private company, effect of such conversion on shareholders, creditors, debentures-holders (if any),deposit holder and other related parties.
4. details of any conversion made within last 5 years and outcome thereof along with copy of order;
5. details as to whether the company is registered under section 8 company.
6. Along with the following documents:
1. Draft copy of the memorandum and articles of association;
2. Copy of the minutes of the general meeting at which the special resolution authorizing such alteration was passed together with details of votes cast in favor and or against with names of dissenters.
3. Copy of Board Resolution or Power of Attorney dated not earlier than 30 days , as the case may, authorizing to file application for such conversion;
4. Declaration by KMP/Director that’s pursuant to the provisions of section 2(68) the company limits the number of its members to 200 and also stating that no deposit has been accepted by the company in violation of the Act and rules made thereunder;
5. Declaration by a KMP/Director that there has been no non-compliance of section 73 to 76A, 177,178,185,186 and 188 of the Act and rules made there under;
6. Declaration by a KMP/Director that no resolution is pending to be filed in terms of section 179(3) and also stating that the company was never listed in any of the Regional Stock Exchanges and if was so listed, all necessary procedures were complied with full for complete delisting of the shares in accordance with the applicable rules and regulations laid down by SEBI.
7. List of creditors and debenture-holders;
8. Affidavit verifying the list of Creditors and Debenture holders (if any).
|10.||Publish an Advertisement in Form INC-25A (at least 21 days before the date of filing of the application) in newspaper.
1. Vernacular newspaper, in the principal vernacular language of the district in which the registered office of the company is situated and ;
2. English newspaper, in English language widely circulating in the state in which the registered office of the company is situated.
|11.||Serve, individual notice at least 21 days before the date of filing of the application, by registered post with acknowledgement due, on each creditors and debenture holder (if any) of the company.|
|12.||Serve, individual notice at least 21 days before the date of filing of the application, by registered post with acknowledgement due, to the Regional Director (RD), Registrar of Companies (ROC) and to the regulatory body, if the company is regulated under the any other law.|
|13.||Where the additional information is sought for by the RD, ensure that the same is furnished, to rectify defects or incompleteness of the original application within a period of 15 days from the date of intimation of submission of such information, in e-Form RD-GNL-5.|
|14.||Where an objection has been received or Regional Director or examining the application has specific objection under the provisions of the Act, Regional Director shall hold a hearing or hearing within a period of 30 days.
If the company is directed to file an affidavit to record the consensus reached at the hearing, ensure that such consensus is filed.
|15.||The order of the Central Government (Regional Director) shall be filed with ROC in e-Form INC-27 within 15 days from the date of receipt of the order along with;
|16.||The order of the Regional Director shall be filed with the ROC with rules 41 (11) in form INC-28 within 15 days from the date of receipt of approval.|
|17.||Ensure that every alteration made in the MOA/AOA of a company. [Refer⸺ Section 15(1)]|