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.
List of the relevant section are as under –
- Section 13 of the Companies Act, 2013 – Alteration of Memorandum;
- Section 14 of the Companies Act, 2013 – Alteration of Article;
- Section 18 of the Companies Act, 2013 – Conversion of companies already registered;
- Rule 33 of the Companies (Incorporation) Rules, 2014 – Alteration of Articles;
- 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.
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.
Related Article: How To Calculate Your HRA Exemption?
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 –
- Copy of MOA and AOA;
- Copy of documents reflecting that the company ceased to become a public company;
- Affidavit verifying the petition;
- Evidence for payment of application fee;
- 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.