Conversion of Private Limited Company into Public Limited Company
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.
Procedure for Conversion of Private Limited Company into Public Limited Company
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:
- Pass a board resolution to get the in-principal approval of Directors for conversion of a Private company into a public company by altering the AOA.
- Fix date, time and place for holding an Extra-ordinary General meeting (EGM) to get approval of shareholders, by way of Special Resolution, for conversion of a Private company into a Public company.
- To approve notice of EGM along with Agenda and Explanatory Statement to be annexed to the notice of General Meeting as per section 102(1) of the Companies Act, 2013;
- To authorize the Director or Company Secretary to issue Notice of the Extra-ordinary General meeting (EGM) as approved by the board under clause 1(c) mentioned above.
- Pass Board resolution for increase in No. of Directors upto 3, if director are less than 3.
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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