CONVERSION OF PRIVATE LTD. COMPANY INTO PUBLIC LIMITED
A private limited company can be converted into a public company and vice versa. Section 14 of Companies Act, 2013 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.
Following is the detailed procedure involved in conversion of Private Company into Public Company-
Step 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 the meeting would be-
- By passing Board Resolution, getting principle approval of the Board of Directors for conversion of Private Company into a Public Limited Company by altering Article of Association (AOA).
- To get the approval of shareholders, fix date, time and place for holding extra ordinary General meeting (EGM) by passing Special Resolution.
- 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.
Step 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
Step 3: Holding of EGM- Hold 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 AOA U/s 14.
Step 4: Registrar of Companies (ROC) Form filing- Few E-forms at different stages needs to be filed with ROC for conversion of Private Company into a Public Company u/s 14. Following are the details-
A) E-Form MGT-14:
- E-form MGT 14 is filed for filing special resolution with ROC for converting Private Company into 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.
A copy of this resolution is required to be filed with ROC through form MGT-14 within 30 days of passing Special Resolution in EGM.
- Attachments of E-form MGT-14-
- Notice of RGM along with explanatory statement u/s 102.
- Certified copy of Special Resolution.
- Altered Memorandum of Association(MOA)
- Altered Article of Association
- Certified copy of Board Resolution. (Optional)
B. E-Form INC-27:
- 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 annexure and with prescribed fee.
- Attachments of E-form INC.27-
- Minutes of member’s meeting where approval was given for conversion and altering of AOA
- Altered AOA
- Certified copy of Board Resolution (Optional)
- Any other information (Optional)
Step 5: 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.
POST CONVERSION FORMALITIES
After conversion f Private Company into Public Company, following points must be kept in mind
- Intimate all the concerned authorities like Excise and sales tax etc. about the status change.
- Arrange new PAN No. of the company. Update company bank account details
- Arrange new stationary with new name of the Company
- Analyze your newly adopted AOA and MOA and remove all things which are in contradiction with the conditions of AOA.
- Raise the paid-up capital to minimum Rs. 5 lakhs, if the same is less than Rs. 5 lakhs.
- Increase Number of Director to minimum 3 Directors.
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.”