CONVERSION OF PUBLIC COMPANY INTO PRIVATE COMPANY UNDER COMPANIES ACT 2013

As per section 14 of the companies Act ,2013 a public company may convert itself into a private company by taking approval of members by way of passing special resolution in the General Meeting and by taking the approval of Central Government on an application made in such form and manner as may be prescribed.

NCLT was handling the cases of conversion of Public Companies into Private Companies,before the notification issued by thre Ministry of Corporate Affairs dated 18 December,2018 to amend the Companies(Incorporation)Rules,2014.

In view of aforesaid section 14 of the Act, a Public Company may convert into a Private Company with prior approval from the Central Government.The conversion of Public Company into Private Company has been explained in the Companies Incorporation (Fourth Amendment) Rules,2018.The central government has vide power to amend rules.These  rules care amend from time to time.

Section and Rules Relevant for the conversion under the Act

1 Section 13

It provide for Aiteration of Memorandum

2 Section 14

It provide for Alteration of Articles

3 Section 18

It allows existing Company to convert itself into as a company of other class under this act by alteration of Memorandum and articles in accordance with the provision of chapter 11 of the Act.

Rule 41  of the Companies Incorporation(Fourth Amendment) Rules, 2018

Application under section 14 for the conversion of public company into private company.

Rule 41 describe the procedural steps for the conversion of Public Company into Private Company

E-forms that will be included

1 Form MGT14

To file special Resolution

2  Form RD-1

Application of conversion

3 Form RD-GNL-5

To file re- submissions

4 Form INC-28

 To file copy of order

Steps to convert public company to private company

1 Hold the Board Meeting as per the provisions of section173 applicable Secretarial standards and other applicable provisions of Companies Act,2013

a To discuss and approve the agenda of conversion and to recommend the same for approval of shareholders

b  To approve the alteration of Memorandum and Articles and to recommend the same for approval of shareholders

c   To fix the date, time and place of general meeting of shareholder

d   To approve the draft notice along with explanatory statement of the general meeting and to authorise Company Secretary of any other person to issue the Notice of General Meeting as per provisions of Companies Act and Secrerarial standards

2   Issue the notice of General Meeting give at least 21 clear days Notice before the General Meeting

3  Hold General Meeting and pass the Special Resolution under section 13&14to

a Approve the conversion  of Public Company into Private Company

b  Approve the Alteration of Memorandum of company to comply with the provisions of section 2(68)

c Approve the Alteration of Articles of the Company to comply with the provisions of section 2(68)