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Conversion of Public Company into a Private Company

JAYAKUMAR (MANAGEMENT TRAINEE) (57 Points)

29 April 2010

Hi Friends,

Thanks for the support you have been providing.

It would be of great help if someone clarifies me on the below mentioned doubt.

On conversion of Public Company into a Private Company, is it mandatory in all the cases to Publish a newspaper notice in two widely circulated dailies of the State where the Regd. Office of the company is situated.

Are not there any situations where the newspaper notice is not required.

Thanks in advance for the support.

Regards,

Jai

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7 Replies

Ankur Garg (Company Secretary and Compliance Officer) (114773 Points)
Replied 29 April 2010

I think you have been misguided by someone. In most of the cases newspaper notice is not required for a public company. Simply follow the commend of section. In normal day to day work of public company newspaper notice is not required.

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(Guest)

If in articles of association, it is written that Newspaper advt. is required then do the same

otherwise no need for advertisement.

CS Ankur Srivastava (Company Secretary & Compliance Officer) (17853 Points)
Replied 30 April 2010

i have a contrary view.

In case of confvertion of PUBLIC COMPANY into a Private Company Public notice is required.

CS Ankur Srivastava (Company Secretary & Compliance Officer) (17853 Points)
Replied 30 April 2010

Notice in newspaper:-

one in English and one in regional language where the registered office of the company is situated for conversion of company into private company for providing opportunity to raise objections, if any, before the Registrar with a copy to company within a period of 21 days from the date of noticed and a copy of the notice be produced before the Registrar alongwith the application.

CS Ankur Srivastava (Company Secretary & Compliance Officer) (17853 Points)
Replied 30 April 2010

PROCEDURE FOR CONVERSION OF PUBLIC COMPANY INTO PRIVATE COMPANY

The power to approve conversion of public company into private company has been delegated to ROC.

Under Section 31 of the Companies Act, 1956, any alteration made in the Articles which has the effect of converting a public company into a private company shall not have effect unless such alteration has been approved by the Cent. Govt. (powers have been delegated to ROC).

Conversion of status of company from public to private would become effective form the date of receipt of the approval of the Registrar through the change of name would become effective on the issue of fresh Certificate of Incorporation.

The Act does not contemplate new Articles of Association, and where it purports to be so, it is nothing more than a special resolution and as such does not require to be stamped.[New Egerton Woolen Mills]

PROCEDURE

The Board should approve the matter subject to the approval of shareholders by way of special resolution, that the company shall be converted converted tin to a private company and will include the word Private before the word Limited.. And accordingly call an EGM.

While altering the Articles ensure that it contains all the restrictive clauses of section 3(1)(iii)

Confirm the number of members not exceeding 50.

Give notice in newspaper one in English and one in regional language where the registered office of the company is situated for conversion of company into private company for providing opportunity to raise objections, if any, before the Registrar with a copy to company within a period of 21 days from the date of noticed and a copy of the notice be produced before the Registrar alongwith the application.

Give notice to all the creditors having secured or unsecured liabilities in excess of Rs. 1.00 lacs by Registered post and proof of delivery of such notice is required to be produced before the Registrar along with the application.

Hold general meeting and pass required special resolutions.

In case of listed company forward three copies of notice and a copy of proceedings of the general meeting to the stock exchanges where the company's shares are listed.

Also forward 6 copies (one of them must be certified) of amended copies of Articles after they have adopted by the General Meeting.

File form 23 along with certified copy of special resolution and amended copy of MOA and AOA within 30 days.

Move an application in form 1B to the concerned ROC within 30 says from the date of Special resolution for approval after the proposal of conversion is approved by the shareholders by way of Special Resolution along with following documents:-

Copy of SR
Copy of minutes of EGM
Copy of notice of EGM along with explanatory statements.
Copy of notice given to creditors along with proof for dispatch of notice.
Copy of public notice in paper in two languages.

Change the name in all documents of the Company be inserting word Private before the word Limited..

Notify the change to all the stakeholders.

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Ankur Garg (Company Secretary and Compliance Officer) (114773 Points)
Replied 30 April 2010

Originally posted by : Ankur Srivastava
	i have a contrary view. In case of confvertion of PUBLIC COMPANY into a Private Company Public notice is required.

Your view is not contrary at all. It is perfectly fine. But Public Notice is for very selective cases and not a big issue for a public company as the author of this post thinks. (Check the query---"In all the cases")