RAJARSHI (CA-Finalist Entrepreneur ) 04 July 2017
Can anyone please guide me how a private limited company can be converted into a wholly owned subsidiary of a foreign company. I need to know the entire procedure to carry out this conversion. Please reply. Thanks in advance.
Karan Batra (Creator: TheProTalks) 05 July 2017
Please note that as per section 2(71) of the companies act, 2013 a subsidiary of a Public Company whether a Foreign company shall also be deemed to be a Public Company.
So basically what you are asking is procedure to convert from a Private Limited company to a Public Company.
Here you go,
PROCEDURE FOR CONVERSION OF A PRIVATE LIMITED COMPANY INTO A PUBLIC LIMITED Section 14 of Companies Act, 2013 (Section 31 of Erstwhile Companies Act 1956) plays an important role during conversion of a Private company into a Public company. Conversion of a Private company into a Public 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.
Find below detailed Secretarial procedure for Conversion of a Private Limited Company into a Public Limited
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. Main agenda for this Board meeting would be:
a. Pass a board resolution to get in-principal approval of Directors for conversion of a Private company into a public company by altering the AOA.
b. Fix date, time and place for holding 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.
c. 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;
d. 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.
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 desired by section 117(3)(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. It is relevant to note that First you have to file form MGT.14 as SRN No. of form MGT.14 will be used in form INC.27.
Attachments of E-form MGT.14:
i. Notice of EGM along with copy of explanatory statement under section 102;
ii. Certified True copy of Special Resolution;
iii. Altered memorandum of association;
iv. Altered Articles of association
v. Certified True copy of Board Resolution may be attached as an optional attachment.
B. E-form INC.27 – Application for conversion of a private company into a public company
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.
Attachments of E-form INC.27:
i. It is mandatory to attach Minutes of the member’s meeting where approval was given for conversion and altered articles of association.
ii. Altered Articles of Association;
iii. Certified True copy of Board Resolution may be attached as an optional attachment.
iv. Other information if any can be provided as an optional attachment(s)
SCRUTINY OF DOCUMENTS BY ROC
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 company. If so satisfied, ROC shall close the former registration and issue fresh certificate of incorporation, after registering the documents submitted for change in class of company.
It is further clarified in section 18(3) that conversion of company does not affect any debts, liability, obligations or contracts incurred or entered into, by the company or on behalf of the company before conversion. Such debts, liability, obligations or contracts shall be enforceable in the same manner as if such conversion has not been done.
Post conversion formalities
After conversion of Private Company into a Public Company kindly take care of the following points:
SECRETARIAL PRACTICE / DRAFTING
Sample Board Resolution for conversion of a Private Company into a Public Company “RESOLVED THAT pursuant to the provisions of Section 14 and other applicable provisions of the Companies Act, 2013 if any, the consent of the Board of Directors of the Company be and is hereby accorded, subject to the approval of the Members of the Company at the General Meeting, to the conversion of this Company into a Public Limited Company and consequently the name of the Company be and is hereby changed from “XYZ Private Limited” to “XYZ Limited” by deletion of the word “Private” from the name of the Company.
RESOLVED FURTHER THAT the word “Private” wherever appearing in the Memorandum and Articles of Association of the Company in the name of the Company be and is hereby deleted.
RESOLVED FURTHER THAT the Company Secretary or any Director of the Company be and is hereby authorized to make application, file forms, etc. for change of status of the Company and consequently its name with the Registrar of Companies office and are hereby further authorized to do all such acts, deeds and things as may be required or deemed expedient to implement this resolution.”
Chandrababu Veerapaneni 19 August 2019
|Originally posted by : RAJARSHI|
|Can anyone please guide me how a private limited company can be converted into a wholly owned subsidiary of a foreign company. I need to know the entire procedure to carry out this conversion. Please reply. Thanks in advance.|