Section 18 of the Companies Act, 2013 allows an existing Company to convert itself as a Company of other class by altering its memorandum and articles of association in the manner prescribed in Chapter II of the Companies Act 2013. Section 13 provides for alteration of Memorandum of Association whereas Section 14 provides for alteration of Articles of Association.
Adoption of New Set of Articles for Public Company
Articles of a Private Company usually contains certain restrictions so during conversion process it is advisable to adopt a new set of articles for resulting public company in order to avoid any future administrative inconvenience. You may find various clauses like quorum for General Meeting, Number of Directors etc. which needs to be redrafted again as per Public company. So, it is, advisable to adopt a new set of Articles applicable to a public company.
Procedure
1. Calling of Board Meeting: Issue notice in accordance with the provisions of section 173(3) of the Companies Act, 2013, for convening a meeting of the Board of Directors. Main agenda for this Board meeting would be:
a. Pass a board resolution to get in-principal approval of Directors for conversion of a Private company into a public company by altering the AOA.
b. Fix date, time and place for holding Extra-ordinary General meeting (EGM) to get approval of shareholders, by way of Special Resolution, for conversion of a Private company into a Public company.
c. To approve notice of EGM along with Agenda and Explanatory Statement to be annexed to the notice of General Meeting as per section 102(1) of the Companies Act, 2013;
d. To authorize the Director or Company Secretary to issue Notice of the Extra-ordinary General meeting (EGM) as approved by the board under clause 1(c) mentioned above.
2. Issue of EGM Notice: Issue Notice of the Extra-ordinary General meeting (EGM) to all Members, Directors and the Auditors of the company in accordance with the provisions of Section 101 of the Companies Act, 2013;
3. Holding of Extra Ordinary General Meeting: Hold the Extra-ordinary General meeting (EGM) on due date and pass the necessary Special Resolution, to get shareholders’ approval for Conversion of Private Company into a Public company along with alteration in articles of association under section 14 for such conversion.
4. ROC Form filing: For alteration in Article of Association for conversion of Private Company into a Public company under section 14, few E-forms will be filed with concerned Registrar of Companies at different stages as per the details given below:
A. E-form MGT.14 – For filing special resolution with ROC, passed for conversion of Private Company into a Public company
In case of alteration in Article of Association for conversion of Private Company into a Public Company Special resolution is required to be passed under section 14. Accordingly as desired by section 117(3)(a), copy of this special resolution is required to be filed with concerned ROC through filing of form MGT.14 within 30 days of passing special resolution in the EGM. It is relevant to note that First you have to file form MGT.14 as SRN No. of form MGT.14 will be used in form INC.27.
Attachments of E-form MGT.14:
i. Notice of EGM along with copy of explanatory statement under section 102;
ii. Certified True copy of Special Resolution;
iii. Altered memorandum of association;
iv. Altered Articles of association
v. Certified True copy of Board Resolution may be attached as an optional attachment.
B. E-form INC.27 – Application for conversion of a private company into a public company
As per Rule 33 of Companies (Incorporation) Rules, 2014, for effecting the conversion of a private company into a public company or vice versa, the application shall be filed in Form No.INC-27 with fee. Accordingly an Application for conversion of a Private company into a Public company is required to be filed in e-Form INC.27 to the ROC concerned, with all the necessary annexures and with prescribed fee.
Attachments of E-form INC.27:
i. It is mandatory to attach Minutes of the member’s meeting where approval was given for conversion and altered articles of association.
ii. Altered Articles of Association;
iii. Certified True copy of Board Resolution may be attached as an optional attachment.
iv. Other information if any can be provided as an optional attachment(s)
