2018 (11) TMI 1044 - Tri - Companies Law

Company's Conversion to Private Limited Approved under Companies Act, 2013

In Re : Manorama Industrial and Technical Services Limited

The Tribunal approved the Company's petition for conversion from a public limited company to a private limited company under Section 14 of the Companies ... Conversion of the status of the company from “Public Limited” to “Private Limited”- Held that:- It transpires from records that the Board of Directors of the Company has passed a resolution in the meeting held on 05.05.2017 approving the conversion to Private Limited Company. A Special Resolution has also been passed on 05.06.2017 with the unanimous approval of 8 shareholders of the Petitioner Company. The said Special Resolution passed at the EOGM on 05.06.2017, has been filed by the company on 15.06.2017 through e-form MGT-14, which has been approved. The Company is stated to be an unlisted public company and is not registered under section 8 of the Act, 2013. Neither the ROC, West Bengal nor any member or creditor of the Company has any objection to the proposed conversion from Public Limited to Private Limited. As regards compliance of the required Rule 68 of NCLT Rules, 2016, it may be noted that the company has published notice of the petition both in English and Bengali Newspapers on 28.12.2017 indicating the intention of conversion from Public to Private status; in spite of public notice the company has not received any objection either from its members, creditors or any persons with regard to the proposed conversion of status of the company; and all the members of the company attended the EOGM on 05.06.2017 and approved the Special Resolution passed at the said meeting. Having regard to since all the requisite statutory compliances have 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 05.06.2017 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 or any other related party of the petitioner company. Issues:Conversion of a public limited company to a private limited company under Section 14 of the Companies Act, 2013.Analysis:The Company filed a petition seeking approval for the conversion from a public limited company to a private limited company. The petition was filed under sub-section (1) of Section 14 of the Companies Act, 2013, following a Special Resolution passed at an Extra-Ordinary General Meeting (EOGM) held on 05.06.2017. The Company provided details regarding its incorporation, share capital, board of directors, and shareholders. The proposed conversion aimed to enhance management efficiency and utilize the privileges available to private limited companies under the Companies Act, 2013.Rule 68 of the NCLT Rules, 2016 mandates the filing of a petition for such conversion in the prescribed format with necessary documents and fees. The Company complied with this rule. The Registrar of Companies, West Bengal, confirmed compliance with the annual return, balance sheet filing, and special resolution approval for the conversion. No objections were raised against the conversion by stakeholders or authorities, except for pending prosecutions against a director of the Company.The Tribunal reviewed the case records, resolutions passed by the board and shareholders, and compliance with Rule 68 of the NCLT Rules, 2016. It noted the absence of objections from members or creditors regarding the conversion. Considering all statutory compliances fulfilled, the Tribunal approved the conversion from a public limited company to a private limited company. The approval was granted in the interest of the Company, ensuring no prejudice to members, creditors, or related parties. The Company was directed to file the order with the Registrar of Companies, West Bengal, along with the altered Articles of Association within 15 days.In conclusion, the Company's petition for conversion was approved by the Tribunal, emphasizing adherence to statutory requirements and ensuring no adverse effects on stakeholders. The judgment facilitated the smooth transition of the Company's status from a public limited company to a private limited company, promoting operational efficiency and compliance with legal provisions.