Procedure for Conversion of a Public Company into a Private Limited Company in India

In India’s dynamic corporate landscape, companies often reassess their structure to align with their evolving business goals. While a Public Limited Company offers advantages like easy access to capital markets and increased credibility, it also brings higher compliance requirements, public disclosures, and stringent regulations.

To streamline operations, enhance decision-making, and reduce the compliance burden, many business owners opt for converting their Public Company into a Private Limited Company. This transformation is not just a change of name — it significantly alters the company’s governance, shareholding, and compliance structure.

At www.corpzo.com, we specialize in helping businesses navigate this transition smoothly, ensuring full compliance with the Companies Act, 2013.

1. Understanding the Difference

Public Company

• Can invite the public to subscribe to its shares.

• Requires a minimum of seven members and three directors.

• Subject to strict compliance and disclosure norms.

Private Company

• Cannot invite the public to subscribe to its shares.

• Requires a minimum of two members and two directors.

• Enjoys reduced compliance requirements and greater operational privacy.

2. Reasons to Convert

1. Reduced Compliance Burden – Lower statutory filings and relaxed audit requirements.

2. Operational Flexibility – Easier and faster decision-making.

3. Privacy – Limited requirement for public disclosure of financial information.

4. Cost Savings – Reduced legal, compliance, and administrative expenses.

5. Better Control – Smaller shareholder base facilitates smoother management.

3. Legal Framework

The conversion process is regulated under:

• Section 14 of the Companies Act, 2013.

• Rule 41 of the Companies (Incorporation) Rules, 2014.

It involves:

• Altering the Articles of Association (AOA) to reflect private company restrictions.

• Passing a Special Resolution in a general meeting.

• Seeking approval from the Regional Director (RD) of the Ministry of Corporate Affairs (MCA).

4. Step-by-Step Procedure for Conversion

Step 1: Convene a Board Meeting

• Approve the proposal for conversion.

• Fix the date, time, and venue for an Extraordinary General Meeting (EGM).

• Approve the draft notice of the EGM, including the agenda and explanatory statement.

Step 2: Send Notice for EGM

• Send the notice to all shareholders, directors, and auditors at least 21 clear days before the meeting.

Step 3: Hold the EGM

• Pass a Special Resolution to:

  • Approve the conversion.

  • Amend the AOA by inserting clauses as per Section 2(68) defining a private company.

Step 4: File Form MGT-14

• File the resolution with the Registrar of Companies (RoC) within 30 days of passing it.

• Attach the altered AOA, MoA, and the resolution as supporting documents.

Step 5: Apply to the Regional Director (Form RD-1)

• Submit the application for conversion along with:

  • Board Resolution.

  • Special Resolution.

  • Altered AOA & MoA.

  • List of creditors and debenture holders.

  • Declaration from directors regarding no pending litigations or dues.

Step 6: Approval from RD

• If no objections are received, the RD will approve the application.

• If objections are raised, a hearing may be scheduled.

Step 7: File Form INC-27 & INC-28 with RoC

• Once RD approval is obtained, file these forms to get the new Certificate of Incorporation as a private limited company.

5. Key Documents Required

1. Certified copies of Board and Special Resolutions.

2. Altered Memorandum and Articles of Association.

3. List of members and creditors.

4. Declaration by directors regarding no pending dues or legal proceedings.

5. Affidavit verifying accuracy of information provided.

6. Post-Conversion Compliance

Once converted, the company must:

• Update its name in all legal documents, signage, stationery, and digital platforms.

• Inform banks, tax authorities, and regulatory bodies.

• File necessary updates in statutory registers.

7. Common Challenges and How to Avoid Them

• Incomplete Documentation – Ensure all resolutions, lists, and declarations are accurate.

• Pending Litigations or Dues – Clear these before applying to avoid rejection.

• Creditors’ Objections – Take creditors into confidence before initiating the process.

• Missed Timelines – Strictly follow the MCA filing deadlines.

8. How Corpzo Can Help

At Corpzo, our experienced legal and compliance professionals offer:

• End-to-End Assistance – From drafting resolutions to obtaining the new incorporation certificate.

• Document Preparation & Filing – Ensuring accuracy and completeness.

• Liaison with MCA & RD – Smooth communication and faster approvals.

• Post-Conversion Support – Compliance management after the transition.

We take care of the legal formalities so you can focus on running your business without disruption.

Conclusion

The conversion of a Public Company into a Private Limited Company can bring significant operational and strategic benefits, but it requires careful adherence to legal procedures. By following the prescribed steps and ensuring proper documentation, the process can be smooth and hassle-free.

With Corpzo’s expertise, you can ensure that your company’s conversion is completed efficiently, legally, and with minimal disruption to operations.

📞 For a free consultation, visit www.corpzo.com today.

Brand Name:- CorpZo

Address:- G 10, Sector 63, Noida, India, 201301,

Email:- reach@corpzo.com,

Phone:- +91 9999 139 391,

Web Address:- https://www.corpzo.com