The Complete Process of Converting a Public Company Into Private Company in India

Checkout the The Complete Process of Converting a Public Company Into Private Company in India.

Conversion of PUBLIC Company to Private Company

List of the relevant section are as under –

  1. Section 13 of the Companies Act, 2013 – Alteration of Memorandum;
  2. Section 14 of the Companies Act, 2013 – Alteration of Article;
  3. Section 18 of the Companies Act, 2013 – Conversion of companies already registered;
  4. Rule 33 of the Companies (Incorporation) Rules, 2014 – Alteration of Articles;
  5. Section 173 (3) of the Companies Act, 2013 – Board Meeting;

PROCEDURE FOR CONVERSION OF PUBLIC COMPANY INTO PRIVATE COMPANY

1. Board meeting –

  • As per section 173 (3), meeting of Board shall be called for by giving, not less than 7 days, notice in writing to all the directors;
  • The main agenda of the board meeting is passing of the resolution for conversion of the company into the private company by altering the articles;
  • In order to get the approval of the shareholder, the date, time and place for holding the Extra Ordinary General Meeting (EGM) needs to be fixed;

2. Issue notice of Extra Ordinary General Meeting for passing the special resolution –

Notice of EGM along with explanatory statements needs to be sent to all the members, directors and the auditors of the company.

3. Extra Ordinary General Meeting –

Holding of Extra Ordinary General Meeting and approval/passing of the special resolution for conversion of the public company into a private company.

4. Filing of Form MGT-14 with ROC –

The special resolution passed for conversion of the public company into a private company needs to be filed in form MGT-14 with the Registrar of Company within a period of 30 days of the passing of the special resolution.

The form MGT-14 needs to be submitted along with the altered memorandum of the company, altered article of the company, a copy of the notice of EGM, a certified copy of special resolution and board’s resolution.

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5. Filing of Form INC-27 –

As per rule 33 of the Companies (Incorporation) Rules, 2014, for effecting the conversion of the public company into a private company, the application in form INC-27 needs to be submitted to the Registrar of Company (ROC).

Form INC-27 needs to be filed within a period of 15 days of the receipt of the order from the Tribunal (i.e. National Company Law Tribunal). 

List of documents to be submitted along with form INC-27 are summarized hereunder –

  • Copy of altered memorandum;
  • Copy of altered article;
  • Copy of special resolution;
  • Order of National Company Law Tribunal (NCLT);
  • Minutes of member’s meeting approving conversion of public company to private company;
  • Such other documents as may be required.

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NATIONAL COMPANY LAW TRIBUNAL RULES, 2016 –

1. Rule 68 – Petition under section 14 of the Company Act, 2013 –

  • A petition in form NCLT-1 needs to be filed with the Tribunal within a period of not less than 3 months from the date of passing of the special resolution.
  • List of documents to be attached with form NCLT-1 are summarized hereunder –
  1. Copy of MOA and AOA;
  2. Copy of documents reflecting that the company ceased to become a public company;
  3. Affidavit verifying the petition;
  4. Evidence for payment of application fee;
  5. Memorandum of appearance along with the copy of the resolution of the board or executed Vakalatnama.
  • List of creditors (name and address) along with the amount due.

2. Form NCLT-3A –

Advertisement of the petition, at least 14 days before the hearing, in form NCLT-3A needs to be given in one vernacular newspaper and one English newspaper.

3. Form NCLT-3B –

Notice in form NCLT-3B needs to be given to all the creditors of the company informing about the conversion process.

4. Submission of notice along with a copy of the petition to other applicable authorities like Registrar of Company (ROC).

Please let us know via comments if you have any doubts regarding the same.

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