Planning to Delist your Company. How to change Public to Private Limited?

Delisting refers to the removal of listed security from a stock exchange.

Delisting refers to the removal of listed security from a stock exchange. The delisting can happen voluntarily or involuntarily, but this usually occurs when a public company seeks to become a private company when operations of a company are declared bankrupt, the Company gets merged or does not meet listing requirements.

To voluntarily delist, a company offers typically shareholders a premium to the price on shares at the exchange. Usually, this is because management is confident that the Company is undervalued or could save substantial money by operating as a private enterprise.

Conversion of Public in Private Limited

As per section 14 of the Companies Act2013, a public company may convert itself into a private limited by taking approval of members by way of passing a special resolution in the general meeting and by taking the permission of central government on an application made in such form and manner.

1. The Board meeting shall be called for the conversion decisions. The Board approves the conversion procedure.

2. The Company shall authorize any representative to act on behalf of the Company for further conversion procedure. One Certified True Copy of resolution may be required on behalf of the Company in favour of any professional to represent the Company before the Regional Director.

3. The General Meeting of the Company shall be called

4. The General Meeting shall decide for the conversion of the Company.

5. The necessary E form should be filed about the decision of translation of the Company. According to the Companies Act, it is mandatory to file certain documents at the time of said filling. The said documents should be carefully submitted.

6. The necessary application for conversion shall be drafted and submitted before the Regional Director.

7. The said application has to file within 60 days from the passing of the said resolution. The documents as mentioned need to be submitted before Regional Director along with the form.

8. A list of creditors and debenture holders needs to be mentioned with said application. Due amounts, claims, and liabilities, contingent, and uncertain debt details need to be recorded.

9. Further, the duly authenticated copy of the list of creditors and debenture holders shall be kept at the registered office the same can be verified and inspected during the ordinary hours of business.

10. After submission of said details, RD may seek additional information, details the same need to be submitted in 15 days. The applicant cannot file more than two resubmissions. RD may reject the application within 30 days after the submission of the application.

11. If the RD has passed no order of approval, or rejection or resubmission then said the application is deemed to allow and automatically law would be given.

12. If any objection is received, the same shall be recorded in writing RD shall conduct hearing within 30 days upon the receipt of the said objection. If any consensus reaches the Company can apply the consensus. The RD shall pass an order within 30 days. In the case where no agreement is received then, RD can reject the application within 60 days.

13. Conversion shall not pass if any case is pending against the Company.

14. The Conversion order has to file within 15 days upon receipt of the law.

IT is the procedure of converting public companies in private limited. After conversion, the private Company shall have benefits concerning minimum compliances. Also, all the information submitted to the regional director needs to be correct.

It is advisable to seek the guidance of a professional during the conversion procedure.

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