We also provide services for conversion from one type of company to another. Such as from proprietor ship concern or partnership firm to LLP or Private or Public Limited company, from Private Limited company to LLP or from OPC to Private Limited company & vice versa after meeting the statutory threshold etc.
FROM PARTNERSHIP FIRM TO LLP
An existing partnership firm can be converted into LLP by complying with the Provisions of clause 58 and Schedule II of the LLP Act. Form 17 needs to be filed along with Form 2 for such conversion and incorporation of LLP.
PRIVATE LIMITED COMPANY TO LLP
Any existing private company or existing unlisted public company can be converted into LLP by complying with the Provisions of clause 58 and Schedule III and IV of the LLP Act. Form 18 needs to be filed with the registrar along with Form 2 for such conversion. A listed company can not be converted into a LLP.
FROM LLP TO PRIVATE LIMITED COMPANY
Section 366 of the Companies Act, 2013 provides that any partnership firm, limited liability partnership, cooperative society, society or any other business entity formed under any other law consisting of seven or more members, may at any time register under Companies Act, 2013 as an unlimited company, or as a company limited by shares, or as company limited by guarantee by following the procedure laid down in Companies (Authorized to Register) Rules, 2014.
– A Company registered under the Indian Companies Act, 1882 or under the Indian Companies Act, 1913 or the Companies Act, 1956 shall not register in pursuance of this section;
- A company having the liability of its members limited by an Act of Parliament other than Companies Act, 2013 or by any other law for the time being in force, shall not register in pursuance of this section as an unlimited company or as a company limited by guarantee;
- A company shall be registered in pursuance of this section as a Company limited by shares only if it has a permanent paid-up or nominal share capital of fixed amount divided into shares, also of fixed amount, or held and transferable as stock, or divided and held partly in the one way and partly in the other, and formed on the principle of having for its members the holders of those shares or that stock, and no other persons;
- A company shall not register in pursuance of this section without the assent of a majority of such of its members as are present in person, or where proxies are allowed, by proxy, at a general meeting summoned for the purpose; - Where a company not having the liability of its members limited by any Act of the Parliament or any other law for the time being is force is about to register as a limited company, the majority required to assent as aforesaid shall consist of not less than threefourths of the members present in person, of where proxies are allowed, by proxy, at the meeting;
- Where a company is about to register as company limited by guarantee, the assent to its being so registered shall be accompanied by a resolution declaring that each member undertakes to contribute to the assets of the company, in the event of its being wound up while he is a member, or within one year after he ceases to be a member, for payment of the debts and liabilities of the company or of such debts and liabilities as may have been contracted before he ceases to be member, and of the costs, charges and expenses of winding up, and for the adjustment of ht rights of the contributories among themselves, such amount as may be required, not exceeding a specified amount.
Process of conversion
Before filing application for conversion, please ensure followings:
- That secured creditors have given their consent for such conversion;
- A notice in newspaper about such conversion, one in English and in vernacular language seeking objections must be published;
- There are minimum seven or more members in the existing LLP for converting the LLP in to a Company.
- A general meeting must be held where majority of partners have given their consent for such conversion.
DIN & Digital Signature Certificate: In case all seven members, who are proposed Directors of the Company after conversion, not holding any DIN then DIN and Digital Signature Certificate for all the proposed Directors of the Company must be obtained. For obtaining DIN an application in Form No. DIR – 3 should be filed on MCA Portal. DIN application is processed and approved by the Central Government through the office of Regional Director, Ministry of Corporate Affairs. Form No. DIR – 3 must be accompanied by self attested Identity Proof and Address Proof and one recent passport size color photograph of the Applicant. All the documents must be attested by a practicing professional viz. Practicing Cost & Management Accountant, practicing Company Secretary or practicing Chartered Accountant.
Name Approval: Name approval has to be obtained from the Registrar of Companies ["RoC"] by submitting an application in eForm INC 1. For this you need to decide various items, which are mentioned in Form INC 1. The name once approved by the authority is valid for 60 days. The Subscriber to the Memorandum and Articles of Association shall be the applicant for the availability of name application.
Preparation and Filing of Form No. URC – 1: After obtaining name approval from the Registrar of Companies, applicant shall prepare and file the Form No. URC – 1 along with the following documents: - A list showing the names, addresses, and occupations of all persons named therein as members with details of shares held by them respectively, showing separately shares allotted for consideration in case and for consideration other than cash along with the source of consideration and distinguishing, in cases where shares are numbered, each share by its number, who on a day, not being more than six clear days before the day of filing this application, were partners of the Limited Liability Partnership;
- A list showing the particulars of persons proposed as the first directors of the Company, their names, including surnames or family names, the DIN, passport number (if any) with expiry date, residential addresses and their interests in other firms or bodies corporate along with their consent to act as Director of the Company;
- An affidavit from each of the persons proposed as the first directors, that he is not disqualified to be a director under section 164(1) and that all the documents filed with the Registrar for registration of the Company contain information that is correct and complete and true to be best of his knowledge and belief;
- A list containing the names and addresses of the Partners of the Limited Liability Partnerships; - A Copy of LLP Agreement and Certificate of Registration duty verified by at least two designated partners of LLP; - A statement specifying the following particulars; a) the nominal share capital of the company and the number of shares into which it is divided; b) the number of shares taken and the amount paid on each share; c) the name of the company, with the addition of the word 'Limited' or 'Private Limited' as the case may require, as the last word or words thereof;
- Written consent or No Objection Certificate from all the secured creditors of the applicant;
- Written consent from the majority of members whether present in person or by proxy at a general meeting agreeing for registration under section 366 of the Companies Act, 2013;
- An affidavit duly notarised, from all the members or partners providing that in the event of registration as a company under Part I Chapter XXI of the Companies Act, 2013, necessary documents or papers shall be submitted to the registering or other authority with which the company was earlier registered, for this dissolution as Limited Liability Partnership;
- Statement of accounts of the company, prepared not later than 6 days preceding the date of application duly certified by auditor, if applicable;
- Declaration of two or more directors verifying the particulars of all members/partners; - Copy of Newspaper advertisement
- Certificate from a Company Secretary in Practice/Cost Accountant in Practice/Chartered Accountant in Practice certifying the compliance with all the provisions of Stamp Act, to the extent applicable;
- No objection certificate from the concerned Registrar of LLP. Memorandum & Articles of Association:
After obtaining name approval, and approval of Form No. URC – 1 from the Registrar, the draft Constitutional Documents of proposed Company i.e. Memorandum of Association (MOA) and Articles of Association (AOA) is to be drafted and then filed with the RoC along with the forms / documents stated below.
Subscription Pages of MOA & AOA – The last page of the MOA and AOA must contain details of the subscribers to the Memorandum and Articles and the number of shares to be subscribed by each. This last page is required to be executed by subscribers.
Filing of Incorporation Forms: The following forms are required to be filed with the RoC:
(i) eForm INC 7 (declaration of compliance with the requirements of the Act on application for registration of a company);
(ii) eForm INC 22 (notice of situation of registered office);
(iii)eForm DIR 12 (appointment of directors of the company); and
(Iv)a Power of Attorney to be executed by subscribers and proposed directors (authorisation by the promoters of the company to a person/s to carry out appropriate changes as suggested by the RoC in any of the incorporation papers that have been filed).
(v)Clarifications/Additional Information Required By RoC: After all the incorporation papers are filed and reviewed by the RoC, the RoC may require certain clarifications. These clarifications or enquiry need to be satisfied by the person who has been authorised to do so by the Power of Attorney filed with the RoC.
Certificate of Incorporation: Once all clarifications are provided, the Certificate of Incorporation is issued by the RoC and the company is deemed to be incorporated from the date of the Certificate of Incorporation. After obtaining the registration under Section 367 of the Companies Act, 2013, intimation to this effect shall be given, within fifteen days of such registration to the concerned Registrar (LLP) under which it was originally registered, along with necessary documents or papers for its dissolution as Limited Liability Partnership.
OPC TO PRIVATE LIMITED COMPANY
In case the paid up share capital of an OPC exceeds fifty lakh rupees or its average annual turnover exceeds during the relevant period exceeds two crore rupees, then the OPC has to mandatorily convert into private or public company. The OPC shall inform RoC in form INC-5, if the threshold limits is exceeded and is required to be converted into private or public company. Form INC-5 shall be filed within sixty days of exceeding threshold limits.
PRIVATE LIMITED TO OPC COMPANY
The private company will also file form INC-6 for converting itself into an OPC. The paid up share capital of private company should not be exceeding fifty lakh rupees and should not have average annual turnover more than two crore rupees at the time of such conversion into OPC. The company shall be having one member and shall appoint one nominee to act as member in case of death or incapacity of the member at the time of conversion into OPC. Form INC-6 shall be filed within 30 days in case of voluntary conversion and within six months of mandatory conversion.
CONVERSION OF PRIVATE LIMITED COMPANY TO PUBLIC LIMITED COMPANY OR VICE VERSA
The Companies Act, 2013 provides for conversion from one type of a company to another. A public company registered under the Companies Act, can convert to a private company by altering the Memorandum of Association and Articles of Association of the company.
Step-1 Call for a Board Meeting to approve the conversion
A Notice must be sent to the directors of the company to convene the Board Meeting not less than seven days prior to the date of the meeting. The notice should be given in writing to each director at his registered address by hand delivery, post or electronic means. The notice must be accompanied by the agenda of the board meeting.
The Board Meeting to convert to a private company can be convened at a shorter notice to “transact urgent business”. However, to transact urgent business at a shorter notice, at least one independent director has to be present in the meeting. In the event that an independent director is absent, the decisions taken at the meeting will be circulated amongst all the directors but can only be finalized upon ratification of at least one independent director, if any.
It is imperative to note that the quorum for a Board Meeting is one-third of the total strength of the directors or two directors, whichever is higher. Participation of directors by videoconference and audiovisual means is permissible.
At the Board Meeting, the resolution approving conversion from a public company to a private company has to be passed.
Secondly, a resolution to call an extraordinary general meeting must be passed. An extraordinary general meeting is imperative to get the approval of the members of the company before proceeding with the conversion.
Extraordinary General Meeting
Firstly, The Board must decide and fix a date, time and place to hold the Extraordinary General Meeting.
Secondly, The Board must approve the notice, agenda and explanatory statement that needs to be sent in accordance with the below mentioned specifications-
21 Days’ Notice
The Board has to call for an extraordinary general meeting of the company. This notice must be sent not less than twenty-one days prior to the date of the meeting. The notice should be given in writing or through electronic mode to every member of the company, the auditor or auditors of the company and every director of the company at their registered address by hand delivery, post or electronic means. The Notice calling the extraordinary general meeting must specifically mention the intention to pass a Special resolution. The notice has to include the date, time and place of the meeting.
An explanatory statement specifying the business to be transacted at the meeting has to be annexed to the notice. The explanatory statement specifies the nature of concern and interest, financial or otherwise, of the director, manager, key managerial personnel and their relatives. Further, the statement encompasses any information, which will allow members to understand the meaning, scope and implications of conversion from a public company to a private company. It is advised to seek assistance of a Company Secretary while drafting the notice calling for an extraordinary general meeting.
The extraordinary general meeting can be called at shorter notice if the consent of not less than ninety-five percent members eligible to vote at the meeting is given in writing or through electronic mode.
Thirdly, the board must authorize a Director or Company Secretary to sign and send the approved notice of the extraordinary general meeting to all the concerned parties.
The quorum for a public company is five members personally present if the number of members as on the date of meeting is not more than one thousand; fifteen members personally present if the number of members as on the date of meeting is more than one thousand but up to five thousand and thirty members personally present if the number of members as on the date of the meeting exceeds five thousand. However if the Articles of Association provide for any other quorum, then the quorum requirements mentioned in the Articles of Association will prevail.
To pass a special resolution, the votes cast in favor of the resolution should be three times the number of votes cast against the resolution.
At the extraordinary general meeting, a special resolution approving the alterations to the Memorandum of Association and Articles of Association needs to be passed.
To constitute a valid extraordinary general meeting-
· A proper notice must be served in the prescribed manner.
· A quorum must be present and it must be properly constituted.
· A proper authority must duly convene the meeting.
· A chairman must preside.
· It must be properly conducted.
· Minutes of the proceedings must be kept.
File form MGT-14 (Filing of Resolutions and agreements with the Registrar)
The company has to intimate the Registrar of Companies within thirty days of passing the resolution to convert from a public company to a private company. Resolutions are filed with the Registrar in Form MGT-14 along with the prescribed fees as prescribed in the Companies (Registration offices and fees) Rules, 2014. The resolution, notice calling the extraordinary general meeting and the explanatory statement should be filed with the Registrar.
Form MGT-14 is available on the website of the Ministry of Corporate Affairs. The instruction kit provided with the form is helpful and self-explanatory. The form can be filled in English or Hindi. The form has to be certified and digitally signed by a whole time practicing Chartered Account or Company Secretary or Cost Accountant.
The following documents have to be attached with the form:
· Copy of the resolution(s)
· Copy of the explanatory statement
· Altered Memorandum of Association
· Altered Articles of Association
· Copy of the agreement
· Any other optional documents
The will have to contain all the details, which the Articles of Association of any Private Company would contain. It is crucial to note that the copy of each resolution that has the effect of altering the articles of association must be annexed to the copy of the amended Articles of Association.
File form INC-27 (Conversion of public company into private company or private company into public company)
Pursuant to Section 14 of the Companies Act, 2013, any alteration to the articles of association has to be intimated to the Registrar vide Form INC-27 to enable the conversion. Further, Rule 33 of the Companies (Incorporation) Rules, 2014 provides that Form INC-27 has to be filed in order to give effect to the conversion of a public company into a private company. The form has to be filed with the Registrar of companies, along with the application fees as prescribed in the Companies (Fee for filings with the Registrar of Companies) Rules, 2014.
Form INC-27 is available on the website of the Ministry of Corporate Affairs. The instruction kit given with the form is helpful and serves as a guidance note to fill the requisite details. The form can be filled in Hindi and English language.
The following documents have to be submitted along with the form-
· Minutes of the members’ meeting
· Altered articles of association
· Order of competent authority (Central Government)
This order must be filed in Form INC-27 within days of receipt of the order from the Central Government
· Any other optional documents
The Registrar of Companies will issue a fresh certificate of incorporation
After all the application forms have been submitted, the Registrar will verify the documents and register them. The Registrar will close the earlier registration of the company and thereafter issue a fresh certification of incorporation.
The new registration will not affect the debts, liabilities, obligations or contracts entered into by the company before the conversion took place. They will still be enforceable, in the same manner as they were before the conversion.
Addition of the word “Private” to the name of the company
Upon conversion the company will have to add the word “Private” to the name of the company. Approval of the Central Government is not necessary when the only change in the name of the company, is the addition of the word “Private” as a result of conversion of the company from one class to another.
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