Converting a Public Ltd Company into Private Ltd Company

A Public Ltd Company into Private Ltd Company

Key requirements and conditions

The company should not be listed in any recognized stock exchange; in case it is listed, it has to wait for a minimum period of 1 year after delisting.

Director Identification Number or DIN is necessary for all the Directors.

Digital Signature Certificate or DSC is necessary for one of the Directors.

Steps to convert public limited company into a private limited company:

The first step is a board meeting to consider the proposal for conversion of public limited company into a private limited company.

The next step is the notice for the general meeting that is to be given 21 days before the meeting where the special resolution is to be passed. An explanatory statement is to be also sent.

The third step is the filing of the special resolution before the Registrar of Companies with filing the Form No. 23 within 30 days after passing the resolution. The Special Resolution, Explanatory Statement and Memorandum and Articles of Association before and after alteration are to be submitted.

The news of the conversion is to be published in 2 widely circulated newspapers in the state where the registered office of the company is located.

Lastly an application has to be made to the Central Government and Form 1B is to be filed with the Registrar of Companies. The attachments would include the notice of the extra-ordinary meeting and its minutes, the power of attorney in favor of the authorized representative, a copy of special resolution, affidavit that the company is not listed on any stock exchange, a copy of the newspaper advertisement, and terms of appointment of management persons. The reasons for conversion, reference number, date of passing and date of filing the e-Form 23, 1 copy of the annual reports for the past 3 years and annual returns is also necessary. The altered Memorandum and Articles of Association and no objection letters from major unsecured and all secured creditors that is supported by an affidavit is also necessary.

On receipt of application, the Registrar of Companies (ROC) shall examine 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 the company is listed, capital contributed by members, and whether the interest of the public and particularly that of the creditors will be adversely affected. He/she will also check if any show cause letter has been issued to the company or its Directors and if members or creditors have any objection to this conversion.

Once the Registrar of Companies approves the application he refers it for reports to the Technical Section and Prosecution Section. The Technical Section is responsible for reporting if the relevant e-Form23 and the last year's annual returns and reports have been filed, and seen and taken into record. The Prosecution Section finds and reports if any complaint is pending from anybody against the company; in case of any adverse problem the authorized representative should look into it and take care to nullify the default or defect.

Last is the issue of a fresh Certificate of Incorporation; it depends on the Registrar of Company being satisfied.