2018 (1) TMI 1179 - Tri - Companies Law

Company successfully converts from Public to Private Limited Company under Companies Act, 2013. Compliance reviewed.

The National Company Law Tribunal approved the conversion of a Public Limited Company to a Private Limited Company under Section 14 of the Companies Act, ... Change of status of the Company from “Public Limited Company” to “Private Limited Company” - conversion by altering the Articles of Associations, as sought to be effected by a Special Resolution passed at the Extraordinary General Meeting (EOGM) - Held that:- Special Resolution for conversion was passed by the Board of Directors of the Company on 24.08.2017 and thereafter, at the EOGM held on 30.08.2017, 6 (Six) Directors and 7 (Seven) Members of the Company had attended and unanimously approved the conversion resolution. The Special Resolution passed at the EOGM held on 30.08.2017 has been filed by the Company on 22.09.2017 through e-form MGT-14. Company has not received any objection either from its members, unsecured creditors or from any persons with regard to the proposed status of the Company; and that all the seven Members of the Company attended the EOGM on 30.08.2017 and approved the Special Resolution passed at the said Meeting. Since all the requisite statutory compliances having been fulfilled, the conversion of the status of the Company from “Public Limited” to “Private Limited” as per Special Resolution passed at the EOGM on 30.08.2017 is hereby approved in the interest of the Company and such change of status of the Company shall not cause any prejudice either to the members or the creditors of the petitioner Company. Issues:1. Conversion of a Public Limited Company to a Private Limited Company under Section 14 of the Companies Act, 2013.Analysis:The Company, originally incorporated as an unlisted Public Limited Company, sought approval from the National Company Law Tribunal to convert into a Private Limited Company through a Special Resolution passed at an Extraordinary General Meeting (EOGM). The conversion was intended to reduce compliance burdens and streamline corporate operations, given the company's closely held nature with seven shareholders and no intention to raise funds publicly. The company had duly followed the procedures outlined in Section 14 of the Companies Act, 2013, and Rule 68 of the NCLT Rules, 2016, including publishing notices, obtaining necessary approvals, and filing required documents.The Registrar of Companies, Chennai, confirmed the company's compliance with financial reporting requirements, absence of investor complaints or prosecutions, and the rationale behind the conversion. The company had also addressed concerns related to creditors, shareholders, and regulatory authorities, ensuring transparency and adherence to legal provisions. The Tribunal reviewed the case records, verified the Special Resolution's approval process, and found that all statutory requirements had been met. The Tribunal approved the conversion from a Public Limited Company to a Private Limited Company, emphasizing that the change would not prejudice the company's stakeholders.In the final decision, the Tribunal directed the petitioner to file a certified copy of the approval order and the altered Articles of Association with the Registrar of Companies within a specified timeframe. The Tribunal's decision to allow the Company's petition for conversion was based on the fulfillment of all legal obligations and the absence of adverse implications for the company's members or creditors. The judgment concluded by disposing of the case, granting approval for the conversion as requested by the petitioner.