Quick Answer
Under the Companies Act, 2013, a private limited company can convert into a public limited company by altering its memorandum and articles of association. This process, governed by Sections 14 and 18, requires a special resolution from shareholders and filing forms MGT-14 and INC-27 with the Registrar of Companies.
Companies Act, 2013 allows conversions of companies from one form to other. A company or LLP can be converted from one type to another. Section 18 of the Companies Act, 2013 deals with the conversion of companies already registered. (Conversion of Private Limited Company into Public Limited Company)
A company already registered in a class may convert itself as a company of another class by alteration of memorandum and articles of the company. An application in this regard is required to be made to Registrar. The Registrar after being satisfied that all provisions have been complied with, shall close the former registration of the company. After registering the documents relating to conversion, the Registrar shall issue a certificate of incorporation. The conversion of a company shall not affect any debt, liabilities and obligations. Such debt, liabilities, obligation and contracts may be enforced as if there is no such conversion.
CONVERSION OF A PRIVATE COMPANY INTO A PUBLIC COMPANY
Legal Provisions related to Conversion of Private Company into Public Company are given in Section 18 and 14 of the Companies Act, 2013 read with Rule 33 of Companies (Incorporation) Rules, 2014.
Section 14 of Companies Act, 2013 plays an important role during the Conversion of Private Limited Company into Public Limited Company.
Conversion of Private Limited Company into Public Limited Company involves alteration of article of association of Private Company u/s 14 which cannot be done without passing special resolution of Shareholders in the General Meeting.
1. Calling of Board Meeting: Issue notice in accordance with the provisions of section 173(3) of the Companies Act, 2013, for convening a meeting of the Board of Directors. The main agenda for this Board meeting would be:
2. Issue of EGM Notice: Issue Notice of the Extra-ordinary General Meeting (EGM) to all Members, Directors and the Auditors of the company in accordance with the provisions of Section 101 of the Companies Act, 2013;
3. Holding of Extra Ordinary General Meeting: Hold the Extra-ordinary General meeting (EGM) on due date and pass the necessary Special Resolution, to get shareholders’ approval for Conversion of Private Company into a Public company along with alteration in articles of association under section 14 for such conversion.
4. ROC Form filing: For alteration in Article of Association for conversion of Private Company into a Public company under section 14, few E-forms will be filed with concerned Registrar of Companies at different stages as per the details given below:
A. E-form MGT.14 – For filing special resolution with ROC, passed for conversion of Private Company into a Public company.
In case of alteration in Article of Association for conversion of Private Company into a Public Company Special resolution is required to be passed under section 14. Accordingly as per section 117(3)(a), a copy of this special resolution is required to be filed with concerned ROC through filing of form MGT.14 within 30 days of passing special resolution in the EGM.
As per Rule 33 of Companies (Incorporation) Rules, 2014, for effecting the conversion of a private company into a public company or vice versa, the application shall be filed in Form No. INC-27 with fee. Accordingly an Application for conversion of a Private company into a Public company is required to be filed in e-Form INC.27 to the ROC concerned, with all the necessary annexures and with prescribed fee.
As per Section 18, after receiving the documents for conversion of a Private Company into a Public Company, ROC shall satisfy itself that the Company has complied with the requisite provisions for registration of the company. If so satisfied, ROC (Registrar of Companies) shall close the former registration and issue a fresh certificate of incorporation, after registering the documents submitted for change in class of company.
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The conversion is governed by Sections 14 and 18 of the Companies Act, 2013, read with Rule 33 of the Companies (Incorporation) Rules, 2014. These regulations outline the requirements for altering the articles of association and the application process for changing the company's registration class.
The process begins by calling a Board meeting to obtain the directors' in-principal approval, fixing the date for an Extra-ordinary General Meeting (EGM), approving the notice and explanatory statement, and ensuring the company has at least three directors as required for a public limited company.
Yes, a special resolution must be passed by the shareholders in a General Meeting to authorize the alteration of the article of association, which is a mandatory step for converting a private company into a public limited company under Section 14 of the Companies Act, 2013.
You must file E-form MGT-14 within 30 days of passing the special resolution to register it with the ROC. Additionally, an application for conversion must be filed using e-Form INC-27, including all necessary annexures and the prescribed fees for the change in company class.
No, the conversion of a company does not affect any existing debts, liabilities, or obligations. These continue to remain enforceable against the company exactly as they were before the conversion took place, as if no change in the status of the company had occurred.