Climb the steps to achieve the goal of Conversion of a Public Limited Company into a Private Limited Company
Rule 41 has been recently added in The Companies ( Incorporation) Rules vide Companies (Incorporation) Fourth Amendment Rules 2018 made effective from 18.12.2018.
The detailed and step wise presentation is been made for better and easy understanding and adaptability.
1. Identify the Creditors and Debenture holders with their names, addresses, nature of debts, liability, claims with amounts due. In case of any contingent and unascertained debt, ascertain the fair estimated value of such debt.
2. Adopt a New MOA and AOA or make suitable changes in the existing one to bring it in consonance with the private company regulations.
3. Prior check that no non compliance of Sections 73 to 76A, 177, 178, 179, 185, 186 & 188 is subsisting.
4. Prior check whether the Company has been ever listed with any Stock Exchange. If so, the Company should at the time of conversion be delisted and all applicable formalities relating to delisting has been completed.
5. Prior check that the Company has not accepted Deposits in contravention to the Act and applicable Rules.
6. Prior check if the Company had applied for the conversion status in last five years. If so, details as to outcome of such process with orders.
7. Reason for the conversion status.
8. Effect/ Impact of such conversion on Debenture holders, Creditors, Shareholders and such other related parties.
9. Convene a Board meeting wherein the proposal for conversion shall be discussed in detail with all mentioned in steps 1-8 with the number of Directors voting for and against shall be recorded.
10. Convene the General Meeting passing the Special Resolution with the number of members who voted for and against the said resolution shall be recorded.
11. Advertise in Form INC25-A at least 21 days before filing an application to Regional Director in two newspapers having wide circulation in one vernacular and other in English language newspaper in the State where the registered office is situated.
12. Simultaneously serve Individual notice with the registered post with acknowledgment due on:
a) Each Creditor
b) Each Debenture holder
c) Regional Director
e) Regulatory Body if the Company is regulated under any Law.
13.Submit an application to the Regional Director in Form RD-1 after 21 days from the date of publication and before 60 days from the date of General Meeting held containing the following details :
a) Board meeting date
b) General Meeting date
c) Reason for conversion
d) Effect of conversion on Creditors, Debenture holders, Shareholders
e) Details if the Company is registered under Section 8
f) Complete list of Creditors, Debenture holders as printed in Step1. However, such list attached to the application should be drawn /prepared not more than 30 days from the date of application. This means that the list needs to be rechecked and redrafted.
g) Draft MOA and AOA
h) Copy of the minutes of the General Meeting
I) Copy of Board resolution authorizing filing of application.
j) Declaration by KMP/ Director as elaborated in Steps3-6.
k) Affidavit signed by CS, if any and two Directors that a full enquiry into the affairs of the Company has been made and apart from those mentioned no other debts/liabilities/claims exist to their knowledge.
14. A duly authenticated list of Creditors and Debenture holders shall be made available for inspection at the registered office premises for inspection and the person who desires can take copies on payment of Rs. 10/page.
15. If no objection is received and application is complete, the Regional Director shall approve the said application within 30 days of receipt of the application.
16. The Regional Director can call for further information, intimate defects/ incompleteness of the application by sending an email mentioned in the application within 30 days of the receipt of application directing to furnish the requisite within 15 days in eform RD GNL5. However, only two resubmission are allowed.
17. Where no information is provided, the Regional Director upon expiry of specified period shall reject the said application.
18. Where no order for approval /resubmission /rejection has been made within stipulated time of 30 days, it shall be deemed that the application is approved and an approval order would be automatically issued.
19. In case any objection is received or Regional Director himself has some specific objection, then he shall record this fact and hold a hearing within 30 days. After the completion of the hearing within 60 days from the date of filing if the application, appropriate orders shall be passed by the Regional Director where consensus is arrived or otherwise the said application shall be rejected.
20. Upon receipt if the Regional Director order confirming the CHANGE of status, the Company shall initimate to the Registrar within 15 days of the receipt of Order in Form INC28.
Where any inquiry, investigation, inspection has been ordered /initiated or any prosecution thereof is pending, conversion shall not be allowed until such inquiry, inspection, investigation is completed.
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