By taking the following steps, a public company can be converted into a private company: 1. Alteration of Articles of Association 2. The Consent of Central Government 3. To File an Altered Copy of Articles with the Registrar.
1. Alteration of Articles of Association:
The Articles of Association of the public company should be altered by passing a special resolution so as to include the restrictions, limitations and prohibitions imposed by the Act on private companies.
2. The Consent of Central Government:
The consent/sanction of the Central Government must be obtained. However, confirmation by court is not necessary. [Section 31 (1)]
3. To File an Altered Copy of Articles with the Registrar:
A copy of the special resolution and a printed copy of the altered articles shall be filed with the Registrar within one month of the date of receipt of order of approval of Central Government.
Resolution for conversion of a public company into a private company may be as follows:
Resolved that AB Ltd. be, and is hereby converted into AB (P) Ltd.
Resolved that the Memorandum of Association be altered accordingly and the Articles be altered in the following manner, that is to say:
4. To file copies of Special Resolution with the Registrar within 30 days.
5. Within three months of passing of special resolution for conversion, application (with the prescribed fee) will be made to the Central Government for approval of the conversion.
6. A copy of minutes of Extraordinary General Meeting and if there are more than twenty-five members, written consent of all the shareholders who had not voted for the conversion will be attached to the application mentioned above.
7. After obtaining approval of the Central Government within one month of the approval order, the company shall file with the Registrar of Companies a printed copy of the new or altered Articles.
The Central Government may permit the conversion of public company into a private company only if it is in the best interests of the company itself and there is a large measure of agreement among the members to the proposed conversion.