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2017 (5) TMI 1433 - Tri - Companies LawConversion from public to private company - Alternation of articles by special resolution subject to the approval by the tribunal - 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.
Issues: Conversion of public company into private company under Sec. 14(1)(b) of Companies Act, 2013.
Analysis: 1. The petition was filed under Sec. 14(1)(b) of the Companies Act, 2013, which allows a company to alter its articles for conversion from public to private company, subject to Tribunal approval. 2. A Ministry of Corporate Affairs notification clarified the applicability of provisions of the Companies Act, 1956 until corresponding provisions of the Companies Act, 2013 were notified. 3. The Tribunal held that the operation of Rule 33 of the Companies (Incorporation) Rule, 2014 became redundant due to the notification, making the Tribunal's approval necessary for conversion. 4. The Tribunal reasoned that the powers conferred to it by Sec. 14(2) of the Act superseded old provisions, and the statute prevails over rules in interpreting the law. 5. Sec. 14 of the Act outlines the process for altering articles for conversion, requiring Tribunal approval and registration with the Registrar of Companies within fifteen days. 6. The MCA also framed NCLT Rules, 2016, including Rule 68 for conversion of public to private companies, which the petitioner complied with in their petition. 7. The Tribunal found the conversion in the interest of the company, causing no prejudice to members or creditors, and allowed the conversion with directions to communicate the altered articles to the Registrar within 15 days.
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