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2017 (4) TMI 72 - Tri - Companies LawConversion from public to private company - Held that - Petitioner has complied with provisions of Section 14 to be read with Rule 68 of NCLT Rules, 2016. Therefore, having regard to all the circumstances, the conversion from public to private is in the interest of the Company which is being made with a view to comply efficiently with the provisions of Companies Act, 2013 causing no prejudice either to the members or to the creditors of the Petitioner. Therefore, the conversion is hereby allowed. The Petitioner is hereby directed to give effect of the conversion by requisite alteration in its Articles which is hereby addressed and communicate the altered Articles within a period of 15 days to the Registrar of Companies, Pune.
Issues involved:
Conversion of a Public Limited Company into a Private Limited Company under Section 14 of the Companies Act, 2013. Detailed Analysis: 1. Transition Period and Ministry Notification: - The transition period from Companies Act, 1956 to Companies Act, 2013 was substantial, leading to arrangements by the Ministry of Corporate Affairs. - A notification dated 11.06.2014 clarified the filing procedures for company conversion from public to private under the Companies Act, 2013. 2. Impact of Notification on Rules: - The notification specified that the provisions of Companies Act, 1956 would remain in force until the corresponding provisions of Companies Act, 2013 were notified. - Consequently, Rule 33 of the Companies (Incorporation) Rule, 2014, pertaining to conversion, became redundant. 3. Superseding Rules by NCLT Powers: - Section 14(2) of the Companies Act, 2013 conferred powers to the National Company Law Tribunal (NCLT) for conversion matters. - The statutory supremacy of the Act over rules was emphasized, rendering Rule 33 redundant. 4. Procedure for Conversion and NCLT Approval: - Section 14 of the Act allows alteration of articles by special resolution for conversion. - The NCLT approval is mandated for conversion of a Public Company into a Private Company. - Post-approval, the altered articles and NCLT order must be filed with the Registrar within 15 days for registration. 5. NCLT Rules and Compliance: - The National Company Law Tribunal Rules, 2016, specifically Rule 68, outline guidelines for conversion. - Compliance with Rule 68 conditions, such as board approval, member resolution, and capital structure disclosure, is essential. 6. Judgment and Conversion Approval: - The Petitioner's compliance with Section 14 and Rule 68 requirements was acknowledged. - The conversion from public to private was deemed beneficial for efficient compliance with the Companies Act, 2013. - The Petitioner was directed to alter its articles accordingly and inform the Registrar within 15 days. 7. Final Decision: - The Company Petition for conversion was allowed, with no cost implications, and the case was closed. This detailed analysis of the judgment highlights the legal procedures, notifications, and compliance requirements governing the conversion of a Public Limited Company into a Private Limited Company under the Companies Act, 2013, as decided by the National Company Law Tribunal, Mumbai.
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