Conversion of Public Company into Private Limited Company: Detailed Procedure

Converting a public company into a private limited company involves several steps that need to be meticulously followed to comply with legal requirements. This guide outlines the detailed procedure for such a conversion.

1. Hold Board Meeting

Notice of Board Meeting:

Issue a notice at least 7 days before the meeting, as per Section 173 of the Companies Act.

Board Resolution:

Pass a resolution to convert the public company to a private limited company.
Approve the draft notice for the Extraordinary General Meeting (EGM) or Annual General Meeting (AGM).

2. File Form RUN (Reserve Unique Name)

File Form RUN to reserve a new name for the private company.
Ensure the proposed name complies with the naming guidelines of the Ministry of Corporate Affairs (MCA).

3. Send Notice of EGM/AGM

Notice Period:

Send the notice of the EGM/AGM at least 21 days before the meeting date to all shareholders.

Hold EGM/AGM:

Conduct the meeting and pass a special resolution to approve the conversion and alter the Memorandum of Association (MOA) and Articles of Association (AOA).

4. File Form MGT-14

File Form MGT-14 with the Registrar of Companies (ROC) within 30 days of passing the special resolution.

Attachments Required:

Certified copy of the altered MOA.
Certified copy of the altered AOA.
Notice of the General Meeting along with an explanatory statement.
Certified copy of the passed special resolution.

5. Make an Application to Regional Director

Form RD-1:

Submit the application in Form RD-1 within 60 days of passing the special resolution.

Attachments Required:

Copies of MOA and AOA with proposed alterations.
Minutes of the General Meeting.
Board Resolution authorising the conversion.
List of creditors and debenture holders.

Resubmission:

The Regional Director (RD) may request resubmissions, which must be completed within 30 days. A maximum of 2 resubmissions are allowed.

6. Newspaper Advertisement

Form INC-25A:

Publish an advertisement in Form INC-25A in one English and one Vernacular language newspaper at least 21 days before making the application to the RD.

7. Regional Director's Order

The RD will issue an order for the conversion if no objections are received within the specified period.

8. File RD's Order to ROC

Form INC-28:

File the RD's order with the ROC in Form INC-28 within 30 days of receiving the order.

Summary of Steps:

Board Meeting:
- Pass a Board Resolution to convert the company.
Reserve Unique Name:
- File Form RUN to reserve a new name.
EGM/AGM:
- Send notice and hold the meeting to pass a special resolution.
Form MGT-14:
- File the form within 30 days of the special resolution.
Application to RD:
- Submit Form RD-1 with necessary attachments.
Newspaper Advertisement:
- Publish in specified newspapers 21 days before RD application.
Order of RD:
- Obtain RD's order if no objections are received.
File RD's Order:
- Submit Form INC-28 to the ROC within 30 days.

Following these steps ensures a smooth transition from a public company to a private limited company while adhering to the legal framework set forth by the Companies Act.

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Article Compiled by:-

~Neel Lakhtariya

(LegalMantra.net Team)

Disclaimer: Every effort has been made to avoid errors or omissions in this material in spite of this, errors may creep in. Any mistake, error or discrepancy noted may be brought to our notice which shall be taken care of in the next edition In no event the author shall be liable for any direct indirect, special or incidental damage resulting from or arising out of or in connection with the use of this information Many sources have been considered including Newspapers, Journals, Bare Acts, Case Materials , Charted Secretary, Research Papers etc.