Subject to the provisions of Companies Act 2013 and the conditions contained in its memorandum, if any, a Company may, by a Special Resolution, alter its articles including alterations having the effect of conversion of a Private Company into a Public Company. [Section 14(1)]
Where a company being a private company alters its articles in such a manner that they no longer include the restrictions and limitations which are required to be included in the articles of a private company under this Act, the company shall, as from the date of such alteration, cease to be a private company. [Section 14(1)]
Mandatory Requirements for the Conversion of a Private Company into a Public Company
- To hold Board meeting for conversion of a Public Company into a Private Company.
- Name clause of Memorandum needs to be amended to exclude the word ‘Private’.
- Alteration of memorandum and articles of the company as per the Companies Act Provisions. [Section 18(1)]
- Make an application to the Registrar for the conversion of a Private Company into a Public Company. [Section 18(2)]
- To hold the General Meeting and passing the required resolution for the conversion of a Private Company into a Public Company.
- Where the company to be formed is to be a public company have at least 7 members. [Section 3(1)(a)]
- The number of Directors should be increased to at least 3. [Section 149(1)(a)] [Refer procedure for Appointment of Additional Director]
- If required, increase the Authorized Share Capital and Paid up Share Capital as prescribed for Public Company. [Refer Procedure for Increase in Authorized and Paid up Capital of the Company]
- Conversion of the company shall not be allowed to a company which has not filed annual returns or financial statements due for filing with the Registrar or which has failed to pay or repay matured deposits or debentures or interest thereon. [Rule 29(1) of Companies (Incorporation) Rules, 2014]
The Following Procedure is to be followed for Conversion of Private Company into Public Company
- Convene a Meeting of Board of Directors [As per Section 173 & Secretarial Standard (SS-1)]:
- Issue Notice of Board Meeting to all the Directors of Company at their addresses registered with the Company, at least 7 days before the date of Board Meeting. A shorter notice can be issued in case of urgent business.
- Attach Agenda, Notes to Agenda and Draft Resolution with the Notice.
- Hold a meeting of Board of Directors of the Company to consider the proposal of conversion.
- Pass the necessary Board Resolution for the proposal of conversion of Company into a Public Company.
- Authorize Company Secretary or any Director to sign and file the relevant form with Registrar of Companies and to do such acts, deeds and things as may be necessary to give effect to the Board’s decision.
- To fix the day, date, time and venue of the General Meeting and to approve the draft notice convening the General Meeting along with explanatory statement annexed to the notice as per requirement of the Section 102 of the Companies Act, 2013 and authorize the Director or Company Secretary to sign and issue notice of General Meeting.
- Prepare and Circulate Draft Minutes within 15 days from the conclusion of the Board Meeting, by Hand/Speed Post/Registered Post/Courier/E-mail to all the Directors for their comments. [Refer the Procedure for Preparation, Signing and Compilation of Minutes]
- Convene General Meeting [Section 96, 100 and Secretarial Standard (SS-2)]
- Notice of General Meeting shallbe given at least clear 21 days before the actual date of a General Meeting in writing, by hand or by ordinary post or by speed post or by registered post or by courier or by facsimile or by e-mail or by any other electronic means or a Shorter Notice can be issued with the consent of at least majority in number and ninety five percent of such part of the paid up share capital of the company giving a right to vote at such a meeting in accordance with Section 101.
- Notice will be sent to all the Directors, Members, Auditors of Company, Secretarial Auditor, Debenture Trustees and to others who are entitled to receive the notice of the General Meeting.
- Notice shall specify the day, date, time and full address of the venue of the Meeting and contain a statement on the business to be transacted at the Meeting.
- Hold the General Meeting and pass a Special Resolution for the conversion of Private Company into Public Company and altering the Memorandum of Association and Articles of Association.
- Check the Quorum and check whether auditor is present, if not. Then Leave of absence is Granted or Not.
- Prepare the minutes of General Meeting, get them signed and compile accordingly. [Refer the procedure for preparation, signing and compilation of minutes of General Meeting].
- Filing of Form INC-27 with ROC [Section 14(2) and Rule 33 of Companies (Incorporation) Rules, 2014]
For effecting conversion of Private Company into Public Company, file an application in E-Form INC-27 with the Registrar along with prescribed fees within fifteen days of passing of Special Resolution along with the following attachments
- Minutes of the Members’ Meeting
- Certified True Copy of Special Resolution
- Altered Memorandum of Association
- Altered Articles of Association
- Any other documents, as required.
- Filing of Form MGT-14 with ROC [Section 117]
File Form MGT-14 with the Registrar of Companies within 30 days of passing the Special resolution in the General Meeting, , along with following documents as an attachment:
- Certified True Copies of the Special Resolutions along with explanatory statement
- Copy of the Notice of meeting sent to members along with all the annexure
- A printed copy of the Memorandum of Association and Article of Association
- Copy of Attendance Sheet of General Meeting
- Shorter Notice Consent, if any.
- New Certificate of Incorporation
On the approval of E-Form MGT-14 and E-Form INC-27, Registrar will issue a fresh Certificate of Incorporation with the Changed name. [Section 13(3) & Rule 29(2) of Companies (Incorporation) Rules, 2014]
- Steps to be followed after Conversion of Private Company into Public Company are:
- Every Alteration made in the memorandum or articles of the company shall be noted in every copy of the memorandum or articles as the case may be. [Section 15(1)]
- Every Company shall:
- Printing the new Altered Memorandum and Articles of Association with new Certificate of Incorporation.
- paint or affix its name, and the address of its registered office, and keep the same painted or affixed, on the outside of every office or place in which its business is carried on, in a conspicuous position, in legible letters, and if the characters employed therefor are not those of the language or of one of the languages in general use in that locality, also in the characters of that language or of one of those languages. [Section 12(3)(a)]
- have its name engraved in legible characters on its seal, if any. [Section 12(3)(b)]
- get its name, address of its registered office and the Corporate Identity Number along with telephone number, fax number, if any, e-mail and website addresses, if any, printed in all its business letters, billheads, letter papers and in all its notices and other official publications. [Section 12(3)(c)]
- have its name printed on hundies, promissory notes, bills of exchange and such other documents. [Section 12(3)(d)]
- Send the new address of registered office with all the Banks, authorities and other Basic Utility Service providers as applicable.
- File Necessary Amendment Application under following Acts
- Goods and Services Act
- Shops & Establishment Act
- Factories Act
- Inter-State Migrant workmen Act
- Private Security Agency Act
- Other Labour Laws
- Industry Specific Laws