Constitutional Validity of Rule 37(8) - Rejection of conversion ...

Court Upholds Rule Validity, Applies 2016 Amendment Retrospectively on Company Liability Conversion Applications.

February 21, 2024

Case Laws     Companies Law     HC

Constitutional Validity of Rule 37(8) - Rejection of conversion of the Petitioner's company from an “Unlimited Liability Company” to a “Limited Liability Company” - The High court concluded that the 2016 Amendment, being curative in nature and intended to protect creditors' interests, applies retrospectively to pending applications. This means that the additional criteria introduced by the amendment for conversion applications must be satisfied for approval. - The HC found the RoC's concerns about protecting creditors and stakeholders to be justified, given the petitioner's significant financial losses and the lack of clearances or undertakings from all shareholders supporting the conversion.

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