Conversion from Limited Company to Private Limited Company

Do you want to change your Limited Company to Private Limited Company?

 

There are many companies looking for such conversion. The main reasons are the relaxations available to a private company. However there are some legal bindings related to the conversion of a public limited into a private limited. This post presents guidelines for those limited companies who want to change their status.

The Companies Act, 2013, (Section 13 and 14) deals with the rules for conversion of a limited company to a private limited company. A public company may become a private company if its membership is within the limits in clause (68) of Section 2 of the Act, Hence, a company needs to pass a special resolution in a general meeting. Any alteration having the effect of conversion of a public company into a private company shall not take effect except with the approval of the Tribunal which shall make such order as it may deem fit. Such a company is required to take the following procedural steps:

 

Procedure to Change a Limited Company to a Pvt. Ltd

 

Here are the steps to alter the legal status of the company.

 

  1. Board Meeting – First of all, call a board meeting to consider and approve the conversion proposal. Pass a resolution to decide time and venue of the general meeting.
  2. Notice of General Board Meeting – Give a notice of 21 days to the members of the board for the general meeting.
  3. Convention of the General Meeting – Pass a special resolution for approval to change the legal status of the company into private limited.
  4. File E-Form MGT-14 – Once the members approve the proposal after meeting, then file the MGT14 form with the Registrar of the Companies. This e-form should be filed within 30 days from the date of passing the special resolution.
  5. Filing E-form INC27 – Once you get an approval to your application of MGT-14 form, file the form INC-27. This form should be filed within 15 days from the date of approval of the form MGT-14.

 

If ROC accepts the application for conversion, a fresh certificate of incorporation will be issued. To ensure that your application gets approved, be precise with the documentation part. 

Documents Required for Converting Public Limited Company into a Private Limited company

 

Following e-forms need to be filed along with the necessary supporting documents.

 

MGT-14 form should be submitted to the ROC along with the following documents:

  • A notice calling EGM
  • A certified true copy of the special resolution passed in the meeting
  • Altered Memorandum of Association
  • Altered Articles of Association

 

INC-27 form should be submitted along with the following enclosures:

  1. Printed copy of the changed Articles of Association
  2. Minutes of the Meeting in which approval to the proposal for conversion was given
  3. Copy of any approval order obtained from the concerned authorities (such as RBI, IRDA, SEBI etc.) or the concerned department.
  4. Any other optional enclosure

 

With the conversion of the limited to a private limited company, some updates are inevitable. You should adopt a new set of articles of association.

Immediately after the approval of the new status by ROC, certain formalities are required. You should apply for new PAN number. Also, the stationery including letterhead should be changed accordingly. Printed copies of the new Memorandum and Articles of Association should be obtained.

It is also significant to inform concerned authorities like the bank, authorities like GST and other stakeholders regarding the change of legal status of your company. This will save you from unnecessary hassles in future.

 

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