Chapter II
INCORPORATION OF COMPANY AND MATTERS INCIDENTAL THERETO
Provisions of the Companies Act, 2013:
Section 18: Conversion of companies already registered.
For this provision, no rules are prescribed the Companies Rules, 2013.
[Section 18 is not yet brought to force.]
Section 18 is not a procedural provision. It confers right on companies to convert itself into any other class of company.
Corresponding provisions of the Companies Act, 1956:
Section 21 (conversion of private company into public company or vice versa)
Section 31 (conversion of public company into private company)
Section 32 (conversion of unlimited company into limited company)
Corresponding provisions of the English Companies Act, 2006
Part 7: Sections 90 to 96 re-registration of private company as public
Part 7: Sections 97 to 101 re-registration of public company as private
Part 7: Sections 102 to 104 re-registration of private limited company as unlimited
Part 7: Sections 105 to 108 re-registration of unlimited private company as limited
Part 7: Sections 109 to 111 re-registration of public company as private and unlimited
Applicability:
This section is applicable to all companies.
Section 18 confers right on companies to convert itself into other class by altering its memorandum and articles of association. Such alteration shall made in the manner prescribed in Chapter II of the Companies Act 2013. It may be noted that section 13 provides for alteration of memorandum and section 14 provides for alteration of articles, whereby a company can be converted into another class of company (say private company to public company etc.).
The company shall make application for conversion into other class of company to the Registrar of Companies (‘ROC’). ROC shall satisfy itself that the Company has complied with the requisite provisions for registration of company. If so satisfied, ROC shall close the former registration and issue fresh certificate of incorporation, after registering the documents submitted for change in class of company.
It is clarified that conversion of company does not affect any debts, liability, obligations or contracts incurred or entered into, by the company or on behalf of the company before conversion. And such debts, liability, obligations or contracts shall be enforceable in the same manner as if such conversion has not been done.
Though the law misses out on enforceability and ownership of its rights and assets, the same shall remain with the company in the same manner as if the conversion has not been done. [case law confirming this contention to be stated]
