Keeping in view the relaxations provided to a Private Company, many public companies have converted into Private Companies or in the process of such conversion. Through this brief write up an attempt has been made to unlock the technicalities related to Conversion of Public Company into Private Company prescribed under Companies Act, 2013. I believe that the procedure for Conversion of Public Company into Private Company along with sample resolutions discussed through this article would be of some help for you all.

Legal Provisions related to Conversion of Public Company into Private Company

Legal Provisions related to Conversion of Public Company into Private Company are given in Section 18 and 14 of the Companies Act, 2013 read with Rule Section and Rule 33 of Companies (Incorporation) Rules, 2014. E-Form INC-27 is required to be filed for this conversion pursuant to section 14 and rule 33. Section 14 of the Companies Act, 2013 and Rule 33 of Companies (Incorporation) Rules, 2014, are reproduced for your quick reference:

Documents to be attached with the application are:-

  • Notice of extra-ordinary general meeting.
  • Minutes of extra-ordinary general meeting.
  • Copy of special resolution.
  • Copy of newspaper advertisement.
  • Affidavit that the company is not listed on any stock exchange.
  • Reference number, date of passing and date of filing the e-Form 23.
  • Payment of requisite application fee.
  • One copy each of the annual reports for the last three financial years.
  • Copy of the last annual return.
  • Altered Memorandum and Articles of Association.
  • No objection letters from major unsecured and all secured creditors supported by an Affidavit.
  • Reasons for conversion.
  • Terms of appointment of all managerial personnel.
  • Power of attorney in favour of the authorised representative.

On receipt of application, the Registrar of Companies(ROC) shall examine:-

  • Whether the interest of the public and particularly that of the creditors will be adversely affected.
  • Whether the company is listed.
  • Capital contribution by members.
  • Whether e-Form 23 has been passed and taken on record.
  • Whether the reasons for conversion are just and sufficient.
  • How many members voted for the resolution.
  • Whether any complaint against the company is pending.
  • Whether any show cause letter has been issued to the company or its Directors.
  • If there is any objection from members and creditors.

If the ROC approves the application, he refers it to Technical Section and Prosecution Section for their report. The Technical Section reports on whether the relevant e-Form23and the last years annual report and annual return has been filed and passed/taken on record. The Prosecution Section reports on whether any complaint is pending from anybody against the company. If during the scrutiny any adverse point arises, that has to be looked into and the authorised representative should take the initiative to make good the default or defect. If the reports are satisfactory, the ROC will issue a letter granting its approval for conversion of a public company into a private company. The concerned ROC then issues fresh certificates of incorporation consequent upon change of name after conversion of the company from 'Public Company' to 'Private Company