2018 (11) TMI 108 - Tri - Companies Law

Company converted to Private Limited as Tribunal approves petition under Companies Act

In Re : Enlightened Projects Limited

The Tribunal approved the conversion of a Public Limited Company into a Private Limited Company under Section 14 of the Companies Act, 2013. The decision ... Conversion of the public Company into Private Limited Company - change of status of company - Special Resolution passed at the Extra Ordinary General Meeting (EOGM) held on 28.04.2017 - Held that:- Having regard to the facts and circumstances of the above case and 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 28.04.2017 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 Involved:Approval for conversion of a company into a Private Limited Company under Section 14 of the Companies Act, 2013.Detailed Analysis:1. Conversion Petition: The petition seeks approval for the conversion of a Public Limited Company into a Private Limited Company, as resolved in an Extra Ordinary General Meeting (EOGM) held on 28.04.2017. The company, engaged in real estate and construction business, aims to streamline corporate compliances and increase efficiency by converting to a Private Limited Company.2. Legal Framework: Section 14 of the Companies Act, 2013 allows a company to alter its articles, including conversion, by a Special Resolution. The second proviso mandates Tribunal approval for conversion from Public to Private Company. Rule 68 of NCLT Rules, 2016 outlines the procedure for such conversions, necessitating compliance with specified requirements.3. Compliance and Affidavits: The company fulfilled Rule 68 requirements by publishing conversion notices in newspapers, obtaining 'No Objection' from Corporate Creditors, and serving relevant authorities. Affidavits confirmed no objections received, and compliance with Section 68 was affirmed through subsequent filings and certificates.4. Approval Process: The Board approved the conversion on 03.04.2017, and at the EOGM on 28.04.2017, the resolution was unanimously approved by shareholders. The Registrar of Companies' report confirmed no objections or pending proceedings against the company, supporting the conversion decision.5. Tribunal Decision: Considering the compliance, lack of objections, and shareholder consensus, the Tribunal approved the conversion from Public to Private Limited Company. The judgment ensures no prejudice to members or creditors, emphasizing the interest and efficiency of the company.6. Order and Compliance: The conversion petition was allowed and disposed of, directing the petitioner to file a certified copy of the order and altered Articles of Association with the Registrar of Companies within 15 days, in accordance with the Companies Act, 2013 and NCLT Rules, 2016.In conclusion, the judgment reflects a thorough evaluation of the legal framework, compliance with procedural requirements, and the company's rationale for conversion, culminating in the Tribunal's approval for the status change to a Private Limited Company.