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PETITION BEFORE NATIONAL COMPANY LAW TRIBUNAL UNDER SECTION 14 OF COMPANIES ACT, 2013

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..... PETITION BEFORE NATIONAL COMPANY LAW TRIBUNAL UNDER SECTION 14 OF COMPANIES ACT, 2013 - By: - Mr. M. GOVINDARAJAN - Corporate Laws / IBC / SEBI - Dated:- 6-10-2016 - - Alteration of articles Section 14(1) provides that subject to the provisions of the Companies Act, 2013 ( Act for short) and the conditions contained in its memorandum, if any, a company may, by a special resolution, alter its articles including alterations have the effect of conversion of- a private company into a public company; or a public company into a private company Conversion of a private company into a public company The first proviso to Section 14(1) provides that where a company being a private company alters its articles in such a .....

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..... manner that they no longer include the restrictions and limitations which are required to be included in the articles of a private company under this Act, the company shall, as from the date of such alteration, cease to be a private company. Conversion of a public company into a private company The second proviso to Section14(1) provides that 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. Petition before the Tribunal A petition under the second proviso to Section 14(1) of the Act for the conversion of a public company into a private company, shall, not less than three .....

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..... months from the date of passing of special resolution, is to be filed before the National Company Law Tribunal ( Tribunal for short) in Form No. NCLT 1. The petition shall be accompanies by the following documents- copy of the memorandum and articles of association; copy of the documents showing that the company ceased to become a public company; affidavit verifying the petition; bank draft evidencing the payment of application fee; memorandum of appearance with copy of the Board resolution or the executed vakalatnama, as the case may be. The fee payable to the Tribunal for conversion of public into a private company is ₹ 5,000/- The petition shall set out the following particulars- the date of the .....

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..... Board meeting at which the proposal for alteration of article was approved; the date of the general meeting at which the proposed alteration was approved; State at which the registered office of the company was situated; number of members of the company, number of members attended the meeting and number of members of voted for and against; reason for conversion into a private company, effect of such conversion on shareholders, creditors, debenture holders and other related parties; listed or unlisted public company; the nature of the company, that is a company limited by shares, a company limited by guarantee, having share capital or not having share capital and unlimited company; details as to whether a company regist .....

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..... ered under Section 8 of the Act . A list of creditors and debenture holders, drawn up to the latest practicable date preceding the date of filing of petition shall be attached to the petition by nor more than two months, setting forth the following details- the names and address of every creditor and debenture holder of the company; the nature and respective amounts due to them in respect of debts, claims or liabilities; in respect of any contingent or unascertained debt or any such claim admissible to proof in winding up of the company, the value, so far as can be justly estimated of such debt or claim; The petitioner company shall file an affidavit, signed by the Company Secretary of the company, if any, and not l .....

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..... ess than two directors of the company, one of whom shall be a Managing Director, where there is one, to the effect that- they have made a full enquiry into the affairs of the company and, having done so, have formed an opinion that the list of creditors is correct; and the estimated value as given in the list ofthe debts or claims payable on a contingency or not ascertained are proper estimates of the values of such debts and claims and that there are no other debts of, or claims against, the company to their knowledge. List to be kept at registered office The petitioner shall keep a duly authenticated copy of the list of the creditors at the registered office of the company. Any person desirous of inspecting the same ma .....

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..... y, at any time during the ordinary hours of business, inspect and take extracts from the same on the payment of ₹ 10/- per page to the company. Advertising the petition The company shall at least 14 days before the date of hearing in the Tribunal advertise the petition. The advertisement shall, unless the Tribunal otherwise orders, or the rules otherwise provide, be advertised in Form NCLT -3A at least once in a vernacular newspaper in the principal vernacular language of the district in which the registered office of the company is situate, and at least one in English language in an English newspaper circulating in that district. Every such advertisement shall state- The date on which the application, petition or re .....

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..... ference was presented; The name and address of the applicant, petitioner and his authorized representative, if any; The nature and substance of the application, petition or reference; The date fixed for hearing; A statement to the effect that any person whose interest is likely to be affected by the proposed petition or who intends either to oppose of support the petition or reference at the hearing shall send a notice of his intention to the concerned Bench and petitioner or his authorized representative, if any, indicating the nature of interest and grounds of opposition so as to reach him not later than two days previous to the day fixed for hearing. The advertisement by the company shall also be placed on the website of .....

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..... the company, if any. Serving of notice The company shall at least 14 days before the date of hearing serve by registered post with acknowledgement due, individual notice in Form NCLT No. 3B on each debenture holder and the creditor of the company. The company shall also serve notice by registered post with acknowledgement due, a notice together with the copy of the petition to the Central Government, Registrar of Companies and to the Securities Exchange Board of India, in the case of listed companies and to the regulatory body, if the company is regulated under any other Act. Objection Where any objection of any person whose interest is likely to be affected by the proposed petition has been received by the petitioner, it .....

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..... shall serve a copy to the Registrar on or before the date of hearing. Affidavit The company shall file an affidavit before the Tribunal, not less than three days from the date fixed for the hearing. In the affidavit the company shall state whether the petition has been advertised in accordance with NCLT Rules and whether the notices, if any, have been duly served upon the persons required to be served. The affidavit shall be accompanies with such proof of advertisement or of the service, as may be available. Where the requirements or the direction of the Tribunal as regard the advertisement and service of petition are not complied with, the Tribunal may either dismiss the petition or give such further directions as it thinks .....

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..... fit. The Tribunal may, if it thinks fit, and upon an application made by the party may dispense with any advertisement required to be published. Order of Tribunal The Tribunal, if it is satisfied, having regard to all the circumstances of the case, that the conversion would not be in the interest of the company or is being made with a view to contravene to avoid complying with the provisions of the Act, disallow the conversion with reasons to be recorded in writing. If it is satisfied that all the provisions relating to conversion are fulfilled then it may approve the alteration of articles for conversion of a public limited company into a private limited company. Filing with Registrar Section 14(2) of the Act provides .....

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..... that every application of the articles and a copy of the order of the Tribunal approving the alteration shall be filed with the Registrar together with a printed copy of the altered articles, within a period of 15 days who shall register the same. Any alteration of the articles registered shall be valid as if they were originally in articles. - - Scholarly articles for knowledge sharing authors experts professionals Tax Management India - taxmanagementindia - taxmanagement - taxmanagementindia.com - TMI - TaxTMI - TMITax .....

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