The public company has the following procedures prescribed in the act for convert private limited company for their status. Similarly, a public limited company can convert itself into a private limited company.
Convert Private Limited Company into Public Limited Company
A company which is initially incorporated as a private limited company. The company can change its status into that of public limited company. The public company has the following procedures prescribed in the act for conversion of status. Similarly, a public limited company can convert itself into a private limited company.
Circumstances for conversion of private limited company into public limited company
A private limited company can convert itself into a public limited company in the following circumstances :
(a)voluntarily on its own volition
(b) by reason of default
(c)by operation of law
Conversion of a private limited company into public limited company on own volition
A private limited company can convert itself into a public limited company on its own volition by complying with the following requirements :
(i) Change the company name by passing a special resolution in the manner provided in section 21. If any change in a company name. It can be occurred by passing a particular declaration. Obtaining approval of the central government by delegation registrar of companies.
Approval of ROC is not necessary where the only difference in the name is the element thereto or deletion therefrom of the word “Private” consequent on the conversion. In conformity with the provisions of the act, of a public limited company into private limited company or a private limited company into public limited company.
(ii) alter the articles to delete the prohibitions, restrictions and limitations contained in section 3(1).
(iii) increase the number of members to more than fifty.
For conversion of a private company into a public company the following steps are required to be taken
1.take the necessary decision in the board meeting. Define the agenda, time, place for converting a meeting to alter the articles of association consequently. The company name by particular resolution.
2.Issue notices for declaring the special declarations with eligible informative statements in the general meeting.
3.Convene the meeting and pass the special declaration to the following effect :
(i) To cancel those articles which are needed to be considered in the articles of a private limited company only. Such other articles why do not assign to a public limited company. It should be canceled and those which implement should be attached.
(ii) Consequent to the above changes, to delete the word “Private” from its company name.
4. The approval of central government by delegation registrar of companies to change of name wherever necessary. Such registration is not required. Where the change relates only to the addition to or deletion from the name. The word “Private” incidental on rectification.
5. Register either the description in the form as ordered under schedule II. The statement in lieu of descriptions in the form as imposed under list IV within 30 days of passing the above special resolution.
6. Filling of form no. 29 is not required by a private limited company converted into a public limited company for their registration activities.
7. Register the special declaration passed and the explanatory statements in form No. 23 with the registrar within 30 days of passing them. The Chennai (ROC) is required for their registration.
8. Assign to the registrar for providing a fresh certificate of Registration in the changed name. The present company name with the word “Private” deleted. On issue of such fresh certificate, the company name is to be changed and converted a new company. It is the final stage of registering a company registration.
It should thus be noted that company registration is to be finalized. The company becomes a public limited company. The special resolution to change the articles to make it a public limited company is passed. The change of a company name becomes effective. Only on the issue of the fresh certificate of registration by the registrar in Chennai (ROC) for changed company name.
Conversion of a private company into a public company by reason of default
A private limited company is required by law to provide by its articles for the following namely :
(i) restrictions on the rights to transfer its shares
(ii) restriction on the maximum number of its members which should not exceed fifty.
(iii) prohibition on any request to the public to approve for any shares in or debentures of the company registration is to be approved.
(iv) The period on any approval or invitation of deposits from persons other than its directors, members or relatives.
Where a failure is made with the aforesaid restrictions, prohibition and limitation are not having in the clauses of a private limited company. The company shall vanish to be a private limited company. It shall not be authorized to the exemptions and privileges consulted on private company for purposes of this act.
A petition praying for relief from consequences of failure to simply with conditions constituting it a private limited company. It is to be form to the regional bench of the company law board in Chennai authorities. The regulations 1991 along with an application fee of Rs.200/-by the following documents.
(i) Certified true copy of articles of association and memorandum
(ii) Copy of document showing that default has been involved in following with the provisions ordered down in clause.
(iii) The legal document verifying the petition.
(iv) Bank draft showing payment of request fee.
(v) Memorandum of impression in Form No.5 of Annexure 1.