Conversion of a Public Limited Company into
a Private Limited
Under section 31 of the Companies Act, 1956, any
alteration made in the Articles, which has the effect of converting a public
company into a private company, shall not have effect unless such alteration
has been approved by the Central Government (powers delegated to the Registrar
of Companies). The following actions are required to be taken in respect of
conversion of a public company into private company:—
(i)
The Board of directors of the public company shall
consider the proposal of conversion at a meeting and would resolve by means of
a resolution that subject to necessary approvals under section 31, the company
shall be converted into a private limited company and will include the word
"Private" before the word "Limited" in its name (Specimen
of Board Resolution given in Appendix 1);
(ii)
Confirm that the numbers of members are not exceeding
fifty;
(iii)
Give notice in newspapers once in English and local
language, where the registered office of the company is situated for conversion
of company into private limited for providing opportunity to raise objections,
if any, before the Registrar with a copy to the company within a period of 21
days from the date of notice and a copy of the notice be produced before the
Registrar alongwith the application (Specimen of the notice has been given in
Appendix 2);
(iv)
Give notice to all the creditors having secured or
unsecured liabilities in excess of Rs. 1.00 Lacs by Registered post and proof
of delivery of such notice is required to be produced before the Registrar
alongwith the application;
(v)
The Board of directors will authorise calling a general
meeting of members by giving notice of at least 25 days (i.e. 21Clear days)
before the meeting and will also approve draft notice to be sent to the members
enclosing with the Explanatory statement under section 172 of Companies Act,
1956;
(vi)
The Board of directors will authorise a director and/or
the secretary to move an application to the concerned Registrar of Companies
for approval after the proposal of conversion in approved at the general
meeting of the shareholders by means of a special resolution (Specimen of
Special Resolutions given in Appendix 3);
(vii)
Certified copy of the special resolution along with
Explanatory Statements and amended copy of the Memorandum and Articles shall be
filed with the Registrar of Companies within 30 days of passing of the
resolution in terms of section 192 in e-Form 23;
(viii)
Make an application in e-Form 1B to the Registrar of
Companies concerned, attaching all enclosures required with the application and
also fee prescribed under Companies (Fees on Application) Rules, 1999 as
amended;
(ix)
Apply to the Registrar of Companies for providing a
fresh certificate of incorporation consequent upon conversion of a public
company into private company;
(x)
Change the name in all documents of the company by
inserting "Private" before the word "Limited".
Appendix 1
Specimen
of Board Resolution for conversion of the Limited Company into a Private
Limited Company
“RESOLVED THAT pursuant to the provisions of
section 31 of the Companies Act, 1956 and subject to the approval of the ROC,
….. and the members at the General Meeting the name of the Company be changed
from KW Limited to KW Private Limited.
FURTHER RESOLVED THAT Shri SK, the Managing
Director of the Company be instructed to issue a notice of Extra Ordinary
General Meeting to the members of the Company and others who are entitled to
receive the same in order to obtain their approval for the above matter of
conversion.
FURTHER RESOLVED THAT Shri SK, the Managing
Director of the Company be and is hereby authorised to make an application to
make an application to the Registrar of companies in e-Form 1B and to do all
such acts, deeds and things as may be required to be done in this regard.”
Appendix 4
Specimen
of notice to be published in newspaper
Notice is hereby given that members of the Company at
their Extra Ordinary General Meeting held on xx.xx.xxxx, have passed a special
resolution for the conversion of the Company KW Limited to KW Private
Limited under the provisions of section 31 of the Companies Act, 1956.
Anybody having objection for such conversion may raise their objection with an
affidavit and supporting evidences, if any, with the Registrar of Companies, Madhya
Pradesh and Chattisgarh with a copy of the same to Company at the Registered
Office. The Registrar of Companies will proceed for issuance of certificate for
change of name after expiry of 21 days from the date of this notice.
For, KW Limited
Place:
Date:
DIRECTOR
Appendix 5
Specimen
of Special Resolutions
I.
Special resolution for conversion of
private limited company into public company
“RESOLVED THAT pursuant to the provisions of
sections 31, 44 and other applicable provisions of the Companies Act, 1956 the
status of the Company be and is hereby converted from PRIVATE LIMITED into PUBLIC
LIMITED Company.
FURTHER RESOLVED THAT pursuant to the provisions of
the Companies Act, 1956 the name of the Company be and is hereby changed from KW
PRIVATE LIMITED to KW LIMITED by deletion of the word 'Private'
before the word Limited in the name of the Company and necessary corrections in
the name Clause of the Memorandum And Articles of Association and all such
other papers, documents and matters be made to give
effect of the changed name accordingly.”
II.
Special resolution for adoption of new set of articles
RESOLVED THAT the a new set of Articles of
Association incorporating the provisions applicable to the Public Limited
Companies as placed before the Meeting be and is hereby substituted and adopted
in the place of the existing Articles of Association of the Company.
Explanatory
statement
Item
No. ….
To
…
The Company was incorporated on 7th September, 1987 as a
Private Limited Company which put some restrictions of the Company and limiting
its scope for its working. The Board of directors of the Company considered that
looking into the expanded business activities the Company should be converted
into a Public Limited Company to get confidence of the public as a whole.
As per the provisions of sections 21, 31, 44, and other
applicable provisions of the Companies Act, 1956 consent of the Members is
required by way of Special Resolution to convert the Company from Private
Limited to Public Limited. Therefore your Directors recommend the resolution
for approval as a Special Resolution as set out under item no. … to … to of the
Notice of the Meeting.
Item
No. ….
The existing Articles of Association of the Company are
limiting the working of the Company as the Articles includes the clause which
are restricting the operations of the Company including therein the restrictive
provisions of section 3(1)(iii) and other provisions of the Companies
Act, 1956. In view of the change in the status of the Company into the Public
Limited and to incorporate the provisions of the Companies Act, 1956, your
directors proposes to substitute the set of the existing Articles of
Association with the new set of the Articles of Association. As per the
provisions of section 31 and other applicable provisions of the Companies Act,
1956 consent of the
Members is required by way of Special Resolution to alter
or adopt a new set of Articles of Association of the Company. Therefore, your
Directors recommend the resolution for approval as a Special Resolution as set
out under item….
A copy of the amended Memorandum of Association and new
set of Articles of Association along with the existing Articles of Association
of the Company is available for inspection, which can be inspected at the
Registered Office of the Company during working hours on any working day.
III.
Special resolution for change of the status of the company from public limited
to private limited
“RESOLVED THAT pursuant to the provisions of
section 31 of the Companies Act, 1956 and other applicable provisions, if any
and subject to the approval of the Central Govt. (Registrar of Companies), the
consent of the members of the Company be and is hereby accorded to convert the
Company from 'Public Limited' to 'Private Limited' and consequently the name of
the company be changed from KW LIMITED to KW PRIVATE LIMITED by
inserting the word 'PRIVATE' before the word 'LIMITED', where as
appears in the Articles of Association of the Company.”
Explanatory
statement
Item
No. …
As the members are aware that the Company was originally
incorporated on 25th October, 1988 as a Private Limited company and thereafter
it has converted by passing special resolution passed by the members on 3rd
February, 1995 as a Public Limited Company and a fresh certificate of
registration to that effect was given by the Registrar on 12th December, 1996. Your
Board of directors considered that since there is no involvement of public in
the shareholding or management of the Company, it would be appropriate to
convert the Company again in the original shape as the Private Limited Company
to avoid unnecessary formalities and to obtain privileges which are available
to the Private Limited Companies which would help the management to carry out its
affairs efficiently. In terms of the provisions of Companies Act, 1956 the
conversion may only be made with the approval of the Registrar of Companies.
The proposal would involve change in the name of the Company by inclusion of
the word 'Private' and incorporation of the restrictive provisions contained in
section 3(1)(iii) of the Companies Act, 1956 and
alteration of the Articles suitably.
The Directors of your company recommend the adoption of
the said Special Resolution as set out in Item No. .. of the notice in the best
interest of the Company. All the material documents and corrected copies of the
Memorandum & Articles of Association of the Company are available for
inspection during the business hours till the date of the Meeting.
None of the Directors of your Company are concerned or
interested in the proposed resolution except as a Shareholder of the Company.
Item
No. ….
The proposal to change the name of the Company would also
involve the inclusion of the restrictions stated in section 3(1)(iii) of
the Companies Act, 1956 in the Articles of Association of the Company.
The alteration in Articles of Association can be done only
by passing a Special Resolution in the general meeting. The resolutions set out
in item no. .. as Special Resolution for approval by the members in terms of
section 31 of the Companies Act, 1956 and the Board thus recommends this
Resolution for members approval. Draft amended copy of the Memorandum and
Articles of Association of the Company is available for inspection for members
till the date of the meeting. None of the directors are concerned or interested
in this Special Resolution except as a member to the extent of their
shareholdings.
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