PUBLIC LIMITED COMPANY TO PRIVATE LIMITED COMPANY
Compared to a Public Limited Company a Private Limited Company can be formed with a minimum paid up capital of Rupees One Lakh and with two members, who can be both shareholders as well as Directors. A Private Limited Company has been exempted from complying with quite a few provisions of the Companies Act compared to Public Limited Company since It cannot offer its shares or debentures to the public, cannot make or accept deposits from the public and there are restrictions regarding the right of transfer of shares.
Sunshine Corporate Solutions can provide your business with resources to convert a public limited company into a private limited company. Many businesses opt for this process because of the specific advantages that they provide, depending on circumstances. Conditions for conversion of a Public Limited Company to Private Limited Company:
• The public company should not be listed on any stock exchanges.
• In case of a listed company, it should wait for at least one year after delisting.
• Steps should be taken to reduce the number of members to two hundred.
• All the directors of the company are required to have a Director Identification Number (DIN).
• At least one of the directors is required to have a Digital Signature Certificate (DSC).
Steps involved in conversion :
Conversion of private limited company to public limited company involves the following procedural steps;
• Board meeting: Board meeting: The Board of directors has to meet and pass a resolution for approving the proposal for Conversion of Public Limited Company to Private Limited Company and to call General Meeting of the shareholders for approval of conversion and to alter the Articles of Association of the Company to include such restrictions and limitations applicable to a Private Limited Company.
• Notice of general meeting: Board has to fix the date, time and venue for holding meeting of the shareholders for obtaining approval for Conversion of Public Limited Company to Private Limited Company. Shareholders should be given a clear notice of at least 21 days for the General meeting. Notice of meeting should contain texts of the special resolution and explanatory statement pursuant to section 102 of the Companies, Act 2013.
• File Special Resolution: The Company files required Form, along with applicable filing fees within 30 days of passing the resolution. The following documents should be attached to this form:
a. Special Resolution for altering the Articles of Association of the Company including the restrictive clauses and limitation applicable to a private Limited Company.
b. Special Resolution for Change of Name of the Company.
c. Special Resolution for altering the Memorandum of Association of the Company.
d. Explanatory statement to the above special resolution.
e. Altered Memorandum and Articles of Association.
• Newspaper notice: The Company has to publish a general notice in two most widely circulated newspapers in the region, where the registered office of the company is located about the conversion and change of its name from ………… Limited to …….. Private Limited with effective date.
• Application to Central Government: The Company has to, within three months of passing of special resolution, file a Form with applicable filing fees to the RoC for approval of the conversion from a Public Limited Company to a Private Limited Company. The following documents are to be attached along with the form.
a. A copy of the special resolution
b. A notice of the Extra Ordinary General Meeting
c. Minutes of the Extra Ordinary General Meeting
d. An affidavit proving that the company is not currently listed on any stock exchange
e. A copy of the above mentioned newspaper advertisement
f. The altered and unaltered Memorandum of Association
g. The altered and unaltered Articles of Association
h. Annual reports of the last three years preceding the resolution
i. A letter stating the reasons for decision regarding conversion of public limited company to private limited company.
j. No objection letters from major unsecured and all secured creditors.
k. Reference number, date of passing and date of filing the e-Form Payment of requisite application fee.
l. A power of attorney (PoA) in favor of an authorized representative.
m. Terms of appointment of all managerial personnel.
Registrar of Companies
When the Registrar of Companies receives the application from the company, it examines the details with respect to the following questions:
• Is the interest of the public and more specifically of the creditors and shareholders affected adversely?
• Is the company listed on any stock exchange?
• What is the capital contribution by the members of the company?
• Has special resolution been passed?
• Are there sufficient reasons for conversion of public limited company?
• What percentage of members voted in favor of the resolution?
• Is there any pending complaint against the company?
• Has a show cause notice been issued to the company, or to any of the directors on board?
• Have any members or creditors of the company raised objections to the resolution?
Other sections
Once the above questions have been satisfactorily answered by the application filed by the company, then the RoC forwards the application to the Technical Section and the Prosecution Section for their reports. Here is what they report:
• Technical Section
• Whether e-Form for special resolution has been filed and passed
• Whether the company has filed the annual report for the last 3 years
• Whether the company has filed annual returns for the last 3 years
• Prosecution Section
• Whether a complaint is pending against the company or on any one its Directors
• Whether other important requirements have been met
Company Incorporation Once the above procedures have been completed, the RoC grants approval for the conversion of public company into a private limited company. It will then issue the company a new certificate of Incorporation.
The process of conversion is very long. Sun Shine Corporate Solutions gives you an advantage through our legal and financial experts. Our professionals understand how these procedures work, and they will help your company expedite the formalities and complete the process in the shortest time possible.
We also offer a range of other corporate services such as new company formation, company incorporation and other important procedures for setting up small, medium or large businesses. Please contact us at the earliest to find the best solution for your company.