Company Registration in Tirupur
Guiding principles :Government approval for converting public into private company
"In considering applications for conversion,the guiding criterion is whether a proposal would be in the best interests of the company itself and that there is a large measure of agreement among the shareholders to the proposed conversion.In particular,an attempt is made to ascertain if the proposal is prompted merely by a desire to overcome the restrictions imposed by some of the provisions of the companies Act,which apply only to public companies e.g., sub-section 295,372,etc., or if the conversion is generally needed for carrying on the business of a company more efficiently.A company having more than 25 shareholders is advised to obtain the written consent of all the shareholders who had not voted for the conversion before Government's approval is considered.To protect the interests of unsecured creditors,the Department has also been insisting on companies obtaining the consent to conversion of every creditor to whom the company owes substantial amounts."
In almost all cases where a public company is converted into a private company,one of to motives which prompts such conversion is to avoid the restrictions imposed on the public companies and enjoy the special privileges and exemptions available to private companies under the Act.If the central Government (as the authority for such approval under the 1956 Act) should refuse to accord its approval to conversion on this ground ,it will be improper and legally changeable.After a company is converted into a private company,it is important that a copy of the special resolution authorizing the conversion and altering the articles so as to comply with the section 40 of the 1956 Act(now section 15 of the 2013 Act)should be included in every copy of the Articles issued thereafter.The company must be in a position to give the certificate required by the section 161 (2)(b) of the 1956 Act [Now section 92 of the 2013 Act].
Approval of Tribunal :Position under Companies Act,2013
As per the second provision to section 14 (1) of the 2013 Act in case of a public company altering its articles to become a private company such conversion take place only with the approval of Tribunal.It must be noted that the provision has not been notified at the time of going to press.
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