Law stated in this post is as on 20th December 2018.
With effect from 18th December 2018, conversion of a public company into a private company requires approval from the Central Government. Earlier such conversion requires approval from the National Company Law Tribunal. This change was made by the Company Amendment (Ordinance) 2018 with effect from 2nd November 2018 and the Companies (Incorporation) 4th Amendment Rules, 2018 with effect from 18th December 2018.
Conversion from a private company to public company is not news and has no legal hurdle also. On the other hand, a decision to convert itself into a public company is always big news. According to the second proviso to subsection (1) of Section 14 of the Companies Act, 2013, “any alteration having the effect of conversion of a public company into a private company shall not take effect except with the approval of the Tribunal which shall make such order as it may deem fit.”
Ministry of Corporate Affairs notified by notification G.S.R. 936(E) on 1st October 2016 the Companies (Incorporation) Fourth Amendment Rules, 2016 amending the Companies (Incorporation) Rules, 2014 with effect from date of publication in official gazette means 1st October 2016. New rule 39 is being inserted with effect from 1st November 2016.
In this blog post we will discuss new rule 39.