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PRIVATE INTO PUBLIC COMPANY

 

The time of the incorporation of a business entity, the applicants are provided with options for selecting their class for Company based on which the Companies Act, 2013 provisions will be applied. To avail the benefits of the other classes, the Companies Act, 2013 allows changing the class post-incorporation from Private Company to Public Company and vice versa. In simple words, Private Company is a closely held Company which put a restriction on transfer of shares through its Articles of Association (AoA). The Companies Act, 2013, prohibits the invitation to the public to subscribe for shares in a Private Company. On the other hand, Public Company does not have any such restrictions regarding an invitation to the public for the subscription of shares or transferability of shares. Both companies have their benefits and limitations. The applicants sometimes desire to change their class of Company. The procedure followed for the Conversion of Private Company to Public Company will be discussed here. The article discusses the relevant provisions of Companies Act, 2013, for Conversion of Private Company to Public Company.


FOR CONVERSION, THE PRIVATE COMPANY IS REQUIRED
TO TAKE THE FOLLOWING PROCEDURAL STEPS


Step 1 : Convene a Board meeting


1. for approving proposal for conversion of the company into a public company.
2. for fixing time, date and venue for holding a general meeting of the company for passing the required special resolution through postal ballot for conversion of the company into a public company.
3. for approving notice for the general meeting along with the explanatory statement as required.

Step 2. Convene a General Meeting


Hold the general meeting and have the aforementioned special resolutions passed for conversion of the company into a public company.

Step 3. Filing of Form MGT-14


Filing of Form MGT-14 Copy of Special Resolutions along with explanatory statements to be filed within thirty days with the Registrar in Form MGT – 14.

Step 4. Numbers of Member Increased


Increase the number of members to minimum seven to comply with requirements of section 3 of the Companies act 2013.

Step 5. Numbers of Director Increased


Increase the number of director to three to comply the requirements of the Section 149 of the companies act 2013.

Step 6. Filing of order of CG


A copy of order of the CG approving the alteration shall be filed with the Registrar in Form INC – 27 with fee together with the printed copy of the altered articles within fifteen days of the receipt of the order from the CG.

Step 7. Certificate of Incorporation


Obtain from the ROC, fresh COI consequent upon conversion of a Pvt company into Public company

Step 8. Printing of MOA and AOA


Have fresh copies of the altered memorandum and articles of association printed, incorporating the changes or effect changes in all copies of the memorandum and articles of association lying in the office of the company, and in letter heads, invoice forms, receipt forms, all other stationery items, and at every other place where the name of the company appears.

Step 9. Notice in Newspaper


Issue, if necessary, a general notice in newspapers informing members and all other concerned persons and public at large that the company has become a public company and its name has been changed
from............... Pvt. Ltd.
To ................ Limited
with effect from ...............

Step 10. Inform the Authorities


Inform all concerned persons/authorities about the conversion of the company from private company to public company.

Step 11. Common Seal


If a company opts to have a common seal, arrange for a new Common Seal and have the same adopted at a meeting of the Board of directors of the company and keep both the old and the new Common Seals in safe custody under lock and key.

Step 12. Printing


To have stationery printed with the new name and/or affix rubber stamp of the new name on all the existing stationery items including the share certificates blanks.


Step 13. Painted the New Name


Have painted the new name of the Company on all the sign boards wherever they are displayed



KEY CONSIDERATIONS FOR CONVERSION OF PRIVATE COMPANY TO PUBLIC COMPANY

1. The members of the Company should approve for the Conversion of Private Company to Public Company.
2. Name clause in the Memorandum of Association (MOA) should be amended to exclude the word Private.
3. The number of members of the Company is 7 before the Conversion of the Company as prescribed under Section 3(1) of the Companies Act, 2013.
4. The number of the director to be increased to 3 as prescribed under Section 149(1) of Companies Act, 2013.
5. The Company should file all the annual returns or financial statements due for filing with the Registrar of Companies (ROC).
6. The Company should pay all the matured deposits as prescribed under Rule 29(1) of Companies (Incorporation) Rules, 2014.
7. An application should be made to modify Permanent Account Number (PAN) of Company.
8. Articles of Association (AOA) should be altered so that they no longer include the restrictions and limitations of a Private Company.