Convert Public Ltd to Private Ltd
1. Introduction:
A company is an association of several individuals formed for some common purpose most present-day companies are incorporated under the Companies Ordinance 1985. a company is capable of holding property, incurring debts, and suiting and being sued in the same manner as an individual.
2. Definition:
According to the Companies Ordinance 1984. See 2 (1) 9:
Company means a company formed and registered under the ordinance.
According to Lord Justice Lindley:
"A company is an artificial person created by law with a perpetual succession a common seal. it has a legal entity, separate from the persons composing it. it can sue and be sued in its name."
According to S. E Thomas:
"A company is an incorporated association of persons formed usually for the pursuit of some commercial purpose."
3. Meaning of company:
The term "Company was originally derived from 2 Latin words
“Com” which means together and
“Panis” which means bread/meal
4. Kinds of company:
- Company Limited by shares.
- Company Limited by Guarantee
- Unlimited company
- Holding company
- Subsidiary company
- Private company
- Insurance company
- Company not-for-profit
- Single member private company (SMC) Through amendment in Companies ordinance (2002)
5. Private Company:
A private company is a company that by its articles
Restrict the rights to transfer its shares, if any.
Limits the number of its members to two fifty not including persons who are not employed by the company and as a single member.
Prohibits invitation to the public to buy shares and debentures.
6. Public company:
According to sec 2 (30) of the company’s ordinance, a public company means a company that is not a private company. it is required to have at least seven members and seven directors appointed accordingly.
7. Main features of the company:
A company has a legal separate legal entity.
The property of a company belongs to its company, not its individual.
A company member is never deemed to be an agent of the company.
The company's shares are transferable.
The liability of shareholders of the company is limited.
Profit is distributed according to the article of association.
It possesses a long life.
Authorized capital is mentioned in the memorandum of association.
Conversion of Public Company into Private Company
A public company can be converted into a private company with the prior approval in writing, and subject to such conditions as may be imposed by the SECP in terms of section 44 read with section 28 of the Ordinance and in compliance with rules 7, 28, 30, 32 and 34 of Rules.
Under rule 7 of the Rules, where the articles of association of a public company have been amended having the effect of converting its status from a public company into a private company, the company is required to make an application not later than sixty days from the date on which the special resolution seeking such alteration was passed, on Form 2 to the Commission for its approval under section 44 of the Ordinance.
Procedure For The Conversion Of Status of Company From Public Company into Private Company
The following procedure is required for the conversion of a public company into a private company:
Proposal for the conversion of status:
The proposal for the conversion of the status of a public company into a private company is first discussed and approved by the Board of Directors.
Notice for convening the general meeting:
21 days Notice accompanied with the proposed special resolution IS issued for convening the general meeting of the shareholders of the company.
Resolution for the conversion of status:
Resolution for the conversion of status from Public Company. into Private Company and alteration in Articles of Association is placed before the members, which is carried as a special resolution.
Amendment in Articles:
The Articles are required to be amended on change of the status therefore, the same must be amended.
Special Resolution along with Bank challan:
Special Resolution on Form 26 along with Bank challan evidencing the deposit of fee shall be filed with the registrar concerned within 15 days passing thereof.
The application shall be sent to the Commission:
The application shall be sent to the Commission within 60 days of the date of passing of the special resolution. Such application shall be accompanied by the following documents:
Form 2. (prescribed under the Rules)
Copy of Form 26 (Special Resolution)
Copy of the Memorandum and Articles of Association duly amended.
Certified copy of the existing Memorandum and Articles of Association.
Copy of latest audited Balance Sheet and Profit and Loss Account.
Copy of minutes of the General Meeting.
Bank challan evidencing the deposit of fee on account of application fee (Form-2)
Affidavit that the contents of the application are true.
Application must be in duplicate and a copy is required to be sent to the registrar concerned under Rule 32 of the Rules.
Approval of conversion:
The Commission gives approval for the conversion of a public company into a private company through an Order.
Certified copy of the order:
A certified copy of the order of the Commission is obtained by depositing the fee.
Registrar issues certificate of conversion of status:
The registrar shall issue a certificate on the conversion of the status of a public company into a private company and the filing certificate in respect of the Special Resolution and Order of the Commission.
Certified copy of Memorandum and Articles:
The company may obtain, a certified copy of the Memorandum and Articles of Association on payment of a copying fee of Rs. 250/- for the application submitted online and 500/- in physical form, and the requisite court fee stamps.
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