Page 39 - DCOM106_COMPANY_LAW

Company Law

Notes If the number of members is below seven, steps should be taken to increase it to at least
seven whilst the number of directors should be increased to at least three, if there are only
two directors.
The word ‘Private’ is to be deleted before the word ‘Limited’ in the name.

Conversion of Public Company into a Private Company

There is no direct or express provision in the Act for the conversion of a public company into a
private company except a reference in the proviso to s.31(1). A public company having a share
capital and membership within the limits imposed upon private companies by s.3(1) (iii), may
become a private company by following the procedure as given below:

The company in general meeting has to pass special resolution for altering the articles so
as to include therein the necessary restrictions, limitations and prohibitions and to delete
any provision inconsistent with the restrictions. For instance, a private company has to
put certain restrictions on the right of members to transfer their shares.
The word ‘Private’ should be added before ‘Limited’.

The approval of the Central Government to the alteration in the articles for converting a
public company into a private company should be obtained.
Within one month of the date of the receipt of the order of approval, a printed copy of the
altered articles must be filed with the Registrar.
With thirty days of the passing of the special resolution, a printed or type-written copy
thereof should be filed with the Registrar.
Self Assessment

5. Match List-I with List-II and select the correct answer using the codes given below the lists:
List-I List-II
A. Duties of auditors 1. Access to Books of company
B. Rights of auditors 2. Penalty for non-compliance with
sections 227 to 229
C. Liabilities of auditors 3. Company in general meeting
D. Removal of auditors 4. To make a report
A B C D
(a) 4 1 2 3
(b) 2 3 1 4
(c) 1 4 3 2
(d) 3 2 4 1
6. Match List-I with List-II and select the correct answer using the codes given below the lists:
List-I List-II
A. A pure ‘guarantee company’ 1. A company limited by shares
B. Share company 2. A company limited by guarantee
C. Hybrid companies 3. Company limited by share or guarantee
D. Wrong statement 4. Company limited by share and guarantee

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