Srikanth (Manager - Accounts) (74 Points)
21 December 2010We are the public limited company (Not Listed) with more than 150 members and having annual turnover of more than Rs. 150 Crores. Now we want to convert into private limited company. Please tell me how to do this?
ROHIT CHATURVEDI
(CA Final Student )
(2298 Points)
Replied 21 December 2010
Restrict the members to 50
Harie
(student)
(148 Points)
Replied 21 December 2010
you need to comply with sec3(1)(iii) of the com. act and also obtain approval of C.G
Regards,
Harie
CS Ankur Srivastava
(Company Secretary & Compliance Officer)
(17848 Points)
Replied 22 December 2010
PROCEDURE FOR CONVERSION OF PUBLIC COMPANY INTO PRIVATE COMPANY
The power to approve conversion of public company into private company has been delegated to ROC.
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 Cent. Govt. (powers have been delegated to ROC).
Conversion of status of company from public to private would become effective form the date of receipt of the approval of the Registrar through the change of name would become effective on the issue of fresh Certificate of Incorporation.
The Act does not contemplate new Articles of Association, and where it purports to be so, it is nothing more than a special resolution and as such does not require to be stamped.[New Egerton Woolen Mills]
PROCEDURE
1. The Board should approve the matter subject to the approval of shareholders by way of special resolution, that the company shall be converted converted tin to a private company and will include the word Private before the word Limited.. And accordingly call an EGM.
2. While altering the Articles ensure that it contains all the restrictive clauses of section 3(1)(iii)
3. Confirm the number of members not exceeding 50.
4. Give notice in newspaper one in English and one in regional language (note:- the language of notice must be English and Regional and not the paper) where the registered office of the company is situated for conversion of company into private company for providing opportunity to raise objections, if any, before the Registrar with a copy to company within a period of 21 days from the date of noticed and a copy of the notice be produced before the Registrar alongwith the application.
5. 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 along with the application.
6. Hold general meeting and pass required special resolutions.
7. In case of listed company forward three copies of notice and a copy of proceedings of the general meeting to the stock exchanges where the company's shares are listed.
8. Also forward 6 copies (one of them must be certified) of amended copies of Articles after they have adopted by the General Meeting.
9. File form 23 along with certified copy of special resolution and amended copy of MOA and AOA within 30 days.
10. Move an application in form 1B to the concerned ROC within 30 says from the date of Special resolution for approval after the proposal of conversion is approved by the shareholders by way of Special Resolution along with following documents:-
1. Copy of SR
2. Copy of minutes of EGM
3. Copy of notice of EGM along with explanatory statements.
4. Copy of notice given to creditors along with proof for dispatch of notice.
5. Copy of public notice in paper in two languages.
11. Change the name in all documents of the Company be inserting word Private before the word Limited..
12. Notify the change to all the stakeholders.
Ankur Garg
(Company Secretary and Compliance Officer)
(114773 Points)
Replied 22 December 2010
/articles/conversion-of-a-public-company-into-a-private-company-5710.asp
CONVERSION OF A PUBLIC LIMITED COMPANY INTO A PRIVATE LIMITED
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).
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)(b);
(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.
Sincerely hope that this article would be off some help. Kindly provide your feedback by posting your comments.
Post conversion
After conversion of public company into a private company kindly check the following points:
1. Intimate all the concerned authorities like Excise and sales tax etc about the status change.
2. Arrange new PAN No. of the company. Update company bank account details.
3. Arrange new stationary with new name.
4. You have to be fully compliant of the conditions given under section 3(1)(iii).
5. Analyse your newly adopted AOA and MOA and remove all things which are in contradiction with the conditions of AOA.
Regards
CAclubindia
