Conversion of Public Limited Company to Private Limited Company

A private company is the one that is owned by a non-governmental organization or by a relatively small number of company members (less than 200). It does not offer or trade its company stock to the common people on the stock market. It is only for private affairs.

Public Company is defined in section 2(71) of the Companies Act, 2013 is an organization whose proprietorship is coordinated by means of portions of stock which are expected to be openly exchanged on a stock trade or in over-the-counter business sectors. A public organization can be recorded on a stock trade (recorded organization), which encourages the exchange of offers, or not (unlisted public organization).

Possible reasons for a switch-

MCA has very hard and fast rules and increased compliance requirement for public companies which makes it hard for them to function smoothly. On the other hand, exemptions are available for private limited companies.

There are many statutory guidelines available for public limited company. This is the main reason why most public limited companies are converting to private limited companies.

Steps for conversion-

  • The first step is for you to hold a board meeting to get the views and approval of the board.
  • The name clause of the memorandum is to be amended. ‘public’ needs to change to ‘private’.
  • Necessary changes have to be made to memorandum and articles of the company.
  • You will have to submit an application to the registrar requesting for the conversion.
  • Now, you have to also hold a general meeting to pass the required resolution for the conversion.
  • Make sure all your financial statements and annual returns are cleared with the registrar and that you have paid mature deposits. No conversion would be allowed in case any of these things is due.

Conversion can be a hectic process, especially if you are not operating from India itself. We, at DBPL, help you to do all such legal and registration processes by assisting you at all times. Our company sets up firms in India for you. Every process is taken care of. This way, you can concentrate on making better business strategies and hence obtain better outputs. Something that a new or transitioning business requires a lot is time. All these processes will drain out your time keep you away from the core activities. Hence, DBPL is the right choice for you.