2019 (4) TMI 1700 - Tri - Companies Law

Conversion of a public company into a private company - Change of status of company - seeking approval of this Tribunal to the conversion by altering the Memorandum and Articles of Association of the Company, as sought to be effected by a Special Resolution passed at the Extra Ordinary General Meeting - HELD THAT - Board of Directors of the Company has passed a resolution in the meeting held on 20-12-2016 approving the conversion to Private Limited Company. A Special Resolution has also been passed on 21-01-2017 with the unanimous approval of the shareholders of the Petitioner Company. The said Special Resolution passed at the EOGM on 21-01-2017, has been filed by the company through e-form MGT-14, which has been approved. The Company is stated to be an unlisted public company. Neither the Registrar of Companies, West Bengal nor any member or creditor of the Company has any objection to the proposed conversion from Public Limited to Private Limited. Since all the requisite statutory compliances have been fulfilled, the conversion of the status of the company from Public Limited to Private Limited as per Special Resolution passed at the AGM on 21-01-2017 is hereby approved in the interest of the company and such change of status of the company shall not cause any prejudice either to the members or the creditors or any other related party of the petitioner company. The Petitioner shall, however, remain bound to comply with the statutory requirements in accordance with law.

Issues:
1. Conversion of a Public Limited Company to a Private Limited Company under Section 14(1)(b) of the Companies Act, 2013.

Detailed Analysis:
1. The Company Petition was filed seeking approval for the conversion of the company from a Public Limited Company to a Private Limited Company as per a Special Resolution passed at an Extra Ordinary General Meeting.
2. Rule 68 of the NCLT Rules, 2016 mandates the filing of such petitions in the prescribed format with necessary documents and filing fee.
3. The company, initially incorporated as a Private Limited Company, changed its name to the current status of an Unlisted Public Company.
4. Details regarding the authorized share capital, current capital structure, and management composition of the company were provided.
5. The main objects of the company's business were outlined, indicating a shift from real estate broking to broader real estate activities.
6. A Special Resolution was passed for the conversion, accompanied by changes in the Memorandum and Articles of Association.
7. Various documents, including Board Resolutions and meeting minutes, were submitted along with the petition.
8. The reason for conversion cited was to streamline operations and avail benefits under the Companies Act, 2013.
9. Assurance was given that the conversion would not adversely affect any stakeholders.
10. Affidavits and notifications regarding the conversion process were filed as per the Tribunal's direction.
11. The Registrar of Companies, West Bengal, submitted a favorable report without objections to the proposed conversion.
12. Several documents, including creditor lists and compliance certificates, were submitted with the petition.
13. Unanimous approval from the Board of Directors and shareholders was obtained for the conversion.
14. Legal provisions under Section 14 of the Companies Act, 2013, and Rule 68 of the NCLT Rules, 2016, were highlighted.
15. The arguments presented by the Petitioner were considered, along with the Registrar's report.
16. Board resolutions and Special Resolutions supporting the conversion were verified.
17. Compliance with Rule 68 of NCLT Rules, 2016, was confirmed, noting the absence of objections from stakeholders.
18. Approval for the conversion from Public to Private Limited Company was granted, ensuring no prejudice to stakeholders.
19. The Company Petition was disposed of with the approval of the conversion.
20. Directions were given to file necessary documents with the Registrar of Companies within a specified timeframe.
21. Provision for supplying an urgent certified copy of the order to the parties involved was made, subject to formalities.

This detailed analysis covers the key aspects of the judgment regarding the conversion of the company's status, legal compliance, stakeholder considerations, and the Tribunal's decision.

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