We all know that The Companies Act, 2013 provides for conversion from one type of a company to another. A Private Company can convert itself into a Public Company merely by altering MOA and AOA but a Public Company can convert itself into a Private Company only after the approval of National Company Law Tribunal (NCLT).
Now the questions arise why National Company Law Tribunal (NCLT) approval would require converting a Public Company into a Private Company…??
The answer is very simple. Public company enjoys the benefits of raising funds from the Public. Shareholders are the owners of the Company and they make the company wealthy, therefore a public company is accountable to their shareholders, creditors, investors, and employees, so when it comes to conversion, legal Status of Public company changes altogether. Company gets the benefit and exemptions of Private Limited Company. Therefore to protect the interests of the stakeholders Public Company requires approval of National Company Law Tribunal (NCLT) to convert itself into a private Limited Company.
Public companies are further subject to several legal and regulatory compliance requirements. Converting to private company increases flexibility reduces various legal and ROC filing compliance requirements.
Section 13, 14, 15 & 18 of Companies Act, 2013, Rule 33(2) Companies (Incorporation) Rules, 2014 and Rule 68-National Company Law Tribunal Rules, 2016 deals with the conversion of public Company into Private Limited Company.
Following is the detailed procedure for converting a Public Company into a Private Company:
1. Calling of Board Meeting with following Agenda:
2. Holding of Extra Ordinary General Meeting
3. Filing of Form MGT-14
i) Certified True copy of Special Resolution
ii) Certified True copy of Board Resolution
iii) Notice of EGM along with explanatory statement
iv) Copy of altered MOA
v) Copy of altered AOA
4. Filing of Petition to NCLT in form NCLT-1
(i) Copy of Memorandum of Association
(ii) Copy of Article of Association
(iii) Affidavit verifying the petition.
(iv) Bank draft evidencing payment of application fee.
(v) Memorandum of appearance with copy of the Board Resolution or the executed Vakalatnama, as the case may be.
5. Publication of Notice
The company shall at least 14 days before the date of hearing:
6. Hearing by Tribunal
7. Filing of E-Form INC-27 with concerned ROC
i) Copy of Order of Tribunal
ii) Minutes, CTC of Special Resolution, Notice & explanatory statement of General Meeting
iii) Altered copy of MOA & AOA
iv) List of Creditor
v) Affidavit from the Director or MD or WTD affirming letter of no objection is obtained from the all creditors and debenture holders.
8. Filing of E-Form INC-27 with concerned ROC
On being satisfied that all the information and documents are submitted and all requirements under the Act are complied with, ROC shall issue a new certificate of incorporation of the Company on the basis of which company can apply for new PAN .
CS Aarti Jain- Email: [email protected]