Conversion of a Public Company into a Private Company
Section 31 plays an important role during conversion of a public company into a private company. As conversion of a public company into a private company involves alteration of article of association of public company which cannot be done under section 31 of the Companies Act, 1956, without previous approval of Central Government (powers delegated to the ROC). This article is not a copied material.
Find below detailed procedure for Conversion of a Public Limited Company into a Private Limited
(i) Hold a Meeting of board of directors of the public company to consider the proposal of conversion of a public company into a private company and pass necessary board resolution for conversion subject to the approval of Central Government.
(ii) Limit the numbers of members to fifty as desired by section 3(1))(iii);
(iii) Publication of newspapers notice is required once in English and local language, where the registered office of the company is situated and a copy of the notice is required to be attached with the application to be filed with the Registrar. This notice is required for providing opportunity to raise objections, if any, to the public at large.
(iv) Notice to all the creditors having liabilities in excess of Rs. One Lacs is required by Registered post and proof of delivery of such notice is required to be attached with the application to be filed with the Registrar.
(v) Board of directors should pass a board resolution for calling a general meeting of members and approve the draft notice of general meeting along with explanatory statement as desired by section 173 of the Companies Act, 1956.
(vi) Certified copy of the special resolution along with Explanatory Statements and amended copy of the Memorandum and Articles is required to file through submission of form-23 with the prescribed fee. This form-23 is required to be filed under section 192 within 30 days of passing special resolution in the general meeting.
(vii) Application for conversion of a public company into a private company is required to be filed in e-Form 1B to the ROC concerned, with all the necessary annexures and with prescribed fee.
(Viii) After that wait for the fresh certificate of incorporation consequent upon conversion of a public company into private company.
The Board of directors should pass a board resolution for authorizing someone to move the application to the concerned Registrar of Companies for approval after passing special resolution regarding conversion.
SAMPLE BOARD RESOLUTION FOR CONVERSION OF THE PUBLIC COMPANY INTO A PRIVATE COMPANY
“RESOLVED THAT pursuant to the provisions of section 31 of the Companies Act, 1956 and subject to the approval of the Central Government and the members at the General Meeting the name of the Company be changed from CAC Tyres Limited to CAC Tyres and Tubes Private Limited.
FURTHER RESOLVED THAT Mr. Ketan Joshi, Managing Director of the Company be and is hereby authorized to make an application to the Registrar of companies, Uttar Pradesh, in e-Form 1B and to do all such acts, deeds and things as may be required to be done in this regard and issue a notice of Extra-ordinary General Meeting to the members of the Company.”
SAMPLE NEWS PAPER NOTICE
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 CAC Tyres Limited to CAC Tyres and Tubes 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, Uttar Pradesh 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.
Place: For, CAC Tyres Limited
Date: Managing Director
SAMPLE SPECIAL RESOLUTIONS FOR CONVERSION OF PUBLIC LIMITED COMPANY INTO PRIVATE LIMITED COMPANY
“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 Government the consent of the Company be and is hereby given to convert the Company from 'Public Limited' to 'Private Limited' and consequently the name of the company be changed from CAC Tyres Limited to CAC Tyres Private Limited by inserting the word 'PRIVATE' before the word 'LIMITED', where as appears in the Articles of Association of the Company.
EXPLANATORY STATEMENT (Most Important part of this Article)
As the members are aware that the Company was originally incorporated on ___________ as a public limited company. 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 into 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.
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.
Do we need to obtain NOCs from Secured Creditors ? as ROC may ask for them to ensure that Creditors' interest is not affecting by such conversion.
And also there is a Check box in Verification saying "The company has obtained all the mandatory approvals from the concerned authorities, departments and substantial creditors in respect of the conversion of a public company into a private company".