Public Limited to Private Limited

CONVERSION OF PUBLIC LTD TO PRIVATE LTD COMPANY

A Public Company can choose to convert itself into a private company. In such a case, it should pass a special resolution to alter its Articles suitably to incorporate the provisions of a private company. In other words, the Articles should be modified so as to include provisions relating to:

  • Limiting the maximum number of members to 50,
  • Restricting the right to transfer shares and
  • Prohibiting invitation to the public for subscription of shares or debentures.

Within 3 months of passing the special resolution to alter its articles, the company should seek the permission of the Central Government.

Once the government gives approval, the company must file a copy of the altered articles with the Registrar of Companies. The Registrar shall issue the required certificate of incorporation duly changing its name by adding the word ‘Private’.

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Documents Required for Conversion

  1. Copy of the memorandum and articles of association.
  2. Copy of the documents showing that the company ceased to become a public company.
  3. Affidavit verifying the petition.
  4. Bank draft evidencing payment of application fee.
  5. Memorandum of appearance with copy of the Board Resolution

Advantages

  1. A private company is simpler to form than a public company. It needs two directors while a public company needs three.
  2. It can start business immediately after in­corporation, no certificate to commence is required but in a public company it is necessary to have a certificate to commence business.
  3. A private company need not hold the Statutory Meeting or file the Statutory Report.
  4.  The control and management is generally in the hands of the owners of capital which is not so in a public company.