Section 13 and 14 of Companies act 2013 and rule 33 of companies (incorporation) rules 2014 deals with provisions relating to conversion of public limited company to private limited company.
Section 13 and section 14 requires the public company to pass special resolution to obtain shareholder’s approval in a general meeting.
Further, section 14(1) of Companies act 2013, clearly specify that alternation to give effect to conversion of public limited company to private limited company can not be done without the approval of tribunal.
However, MCA vide circular number 18 dated 11th June 2014 has clarified that the second proviso to sub section 1 of section 14 of the Companies act 2013 has not yet notified therefore, corresponding provision of Companies act 1956 (proviso to sub section (1) of sub section (2A) of section 31) shall remain in force till corresponding provisions of companies act 2013 are notified.
Under Companies act 1956, such power has been delegated by central government to registrar of companies. This means we need to file following e-Forms with registrar of companies to convert public limited company to private limited company;
- E-Form MGT14 – to file special resolution
- E-Form INC27 – application for converting public limited company to private limited company
Procedures for converting a public company to private company
Now we will discuss steps that are involved in conversion of public ltd company to private limited company. Here are the steps that any public limited company can follow.
In the first step company is required to call a board meeting to discuss and approve the conversion proposal. In that board meeting, resolution for conversion of public company to private company has to be discussed and approved. Same board meeting should also authorize a director to take necessary action to comply with the provisions of the Companies act 2013 and to take all necessary actions as required.
Pass another resolution to decide place, venue, time of general meeting and to approve notice calling general meeting.
In the second step, give 21 clear days notice to members for the general meeting by proposing special resolution with suitable explanatory statements.
In the general meeting, if members have approved the proposal then file e-form MGT14 within 30 days from the date of passing special resolution with following attachments;
- Notice calling general meeting
- Certified true copy of the special resolution in company’s letter head
- Altered MOA
- Altered AOA
After getting approval to e-Form MGT14, in the third and last step, the public company has to file e-Form INC27 with ROC within 15 days with following attachments;
- Printed copy of the altered articles of association
- Minutes of the member’s meeting where approval was given for conversion and altered article of association
Printed copy of memorandum of association or moa is not required to be attached with e-Form INC27 as central government’s approval is not required for change in name clause of MOA if its only addition or deletion of the word private to the name.
After completion of above procedure, a new certificate of incorporation will be issued consequent up on conversion of public limited company to private limited company.