Setting Up of Business, Industrial and Labour Laws · Conversion of Business Entities

Section 18: Conversion of Companies Already Registered under the Companies Act 2013

Updated 11 October 2026 · Fact-checked

Section 18 of the Companies Act, 2013 lets a company of one class convert into a company of another class under the Act. It does this by altering its memorandum and articles. The Registrar closes the old registration and issues a fresh certificate of incorporation. Existing debts, liabilities and contracts are not affected.

Understand Section 18: Conversion of Companies Already Registered

A company is registered under the Companies Act, 2013 as a particular class, for example a private company or a public company. Over time, its needs change. A private company may want to raise money from the public. A public company may want fewer compliances. Section 18 gives the route for such a change.

The section says a company of any class registered under the Act may convert itself into a company of another class. The tool for conversion is alteration of the memorandum and articles in line with the provisions of Chapter II. So conversion is not a new company. It is the same company changing its class.

The Registrar does the final step. On the company's application, the Registrar must be satisfied that the Chapter II provisions applicable to registration of companies are complied with. Then the Registrar closes the former registration and, after registering the documents, issues a certificate of incorporation in the same manner as its first registration.

The key protection is in sub-section (3). Registration under this section does not affect any debts, liabilities, obligations or contracts incurred or entered into by or on behalf of the company before conversion. They can be enforced as if the conversion had not taken place. Creditors and counterparties are therefore not harmed.

The name also matters. Under Section 13(2), a name change normally needs Central Government approval in writing. The proviso removes that need where the only change is deleting or adding the word "Private" because of conversion from one class of company to another. The alteration of the memorandum needs a special resolution under Section 13(1).

Key rules to remember

Who can convert: Company of any class registered under the Act → company of other class under the Act; Section 18(1). Conversion is by alteration of memorandum and articles as per Chapter II.
Registrar's role: Application → Registrar satisfied → closes former registration → registers documents → issues certificate of incorporation as on first registration; Section 18(2). The Registrar acts on an application made by the company.
Effect on past obligations: Debts, liabilities, obligations, contracts before conversion remain enforceable as if no conversion; Section 18(3). Conversion does not wipe out or change what the company owed or agreed earlier.
Alteration of memorandum: Special resolution + procedure under Section 13; Section 13(1). The resolution is filed with the Registrar under Section 13(6)(a).
Name change on conversion: No Central Government approval if only "Private" is added or deleted; Proviso to Section 13(2). Any other name change needs written approval.
Effectiveness of alteration: No effect until registered; Section 13(10). Conversion is complete only on registration and the fresh certificate.

How to solve Section 18: Conversion of Companies Already Registered questions

Use this method for any question on conversion of a company under Section 18. Keep the answer in ICSI style: provision, facts, conclusion.

1Identify the class of the company now and the class it wants to become, for example private to public.
2State the rule: Section 18(1) allows a company of any class to convert into another class by altering its memorandum and articles per Chapter II.
3Apply Section 13: a special resolution is needed to alter the memorandum, and the resolution is filed with the Registrar.
4Deal with the name: if only the word "Private" is added or deleted, no Central Government approval is needed under the proviso to Section 13(2); otherwise approval is required.
5Describe the Registrar's step under Section 18(2): on application, the Registrar checks compliance, closes the former registration and issues a certificate of incorporation as on first registration.
6Apply Section 18(3) to any creditor or contract issue: past debts, liabilities, obligations and contracts stay enforceable.
7Write a clear conclusion that answers the exact question asked, in one or two lines.

Quickest way: Three-point recall: Alter, Apply, Assure

When to use it: Use it for short-answer or theory questions where time is tight and you need the core of Section 18 in a few lines.

Alter: the company alters its memorandum and articles by special resolution to suit the new class.
Apply: the company applies to the Registrar, who closes the old registration and issues a new certificate of incorporation.
Assure: past debts, liabilities, obligations and contracts are unaffected and remain enforceable.
Add the name point in one line: only adding or deleting "Private" needs no Central Government approval.

Common mistakes in Section 18: Conversion of Companies Already Registered

Saying conversion creates a new company and the old one ends with its liabilities.
The word "close the former registration" sounds like the company is wound up.
Fix: Remember Section 18(3): only the registration is closed. Past debts, liabilities and contracts remain enforceable as if no conversion had occurred.
Claiming Central Government approval is always needed for the name change on conversion.
Section 13(2) states the approval rule first, and the proviso is missed.
Fix: State the rule and the proviso. No approval is needed where the only change is adding or deleting the word "Private".
Forgetting the special resolution.
Students focus on the Registrar and forget that the alteration starts inside the company.
Fix: Always say the memorandum is altered by special resolution under Section 13(1), and that the resolution is filed with the Registrar.
Treating the conversion as effective once the resolution is passed.
Passing the resolution feels like the main event.
Fix: Cite Section 13(10): no alteration has effect until it is registered. The fresh certificate of incorporation completes the conversion.
Mixing up Section 18 with conversion into an LLP under the LLP Act, 2008.
Both are called conversion and both use a certificate.
Fix: Section 18 is a change of class within the Companies Act, 2013. Conversion into an LLP is under the LLP Act and the company is deemed dissolved on registration as an LLP.

Worked examples

Example 1

Sunrise Foods Private Limited, a company registered under the Companies Act, 2013, wants to become a public company. It owes ₹40,00,000 to a supplier under a contract made before the conversion. Can the supplier still enforce the dues after the conversion? Explain with reference to Section 18.

Show the solution

Provision: Section 18(1) allows a company of any class registered under the Act to convert itself into a company of another class by altering its memorandum and articles as per Chapter II.
Process: the company passes a special resolution to alter its memorandum and articles and applies to the Registrar. The Registrar closes the former registration and issues a certificate of incorporation as on first registration.
Effect on debts: Section 18(3) says registration under the section does not affect any debts, liabilities, obligations or contracts made before conversion. They may be enforced as if the registration had not been done.
Application: the ₹40,00,000 owed to the supplier is a debt incurred before conversion.

Answer: Yes. The supplier can enforce the ₹40,00,000 claim against the company after conversion, because Section 18(3) preserves all pre-conversion debts, liabilities, obligations and contracts.

Example 2

Himalaya Traders Limited, a public company, converts into a private company. The only change in its name is the deletion of the word "Limited" and addition of "Private Limited". Does it need Central Government approval for the name change? When does the conversion take effect?

Show the solution

Provision: Section 18(1) permits conversion into another class by altering the memorandum and articles.
Name: under Section 13(2), a change of name needs written Central Government approval. The proviso says no approval is needed where the only change is deletion or addition of the word "Private" consequent on conversion from one class of company to another.
Application: the only change here is adding "Private". So no Central Government approval is needed.
Effect: under Section 18(2), the Registrar closes the former registration and issues a certificate of incorporation. Section 13(10) says no alteration has effect until registered.

Answer: No Central Government approval is needed, as the only change is the addition of the word "Private". The conversion takes effect only when the alteration is registered and the Registrar issues the fresh certificate of incorporation.

Exam tips

Write the answer in ICSI style: provision first (Section 18), then facts, then a one-line conclusion.
Always quote sub-section (3) when the question mentions creditors, contracts or pending liabilities.
Link Section 18 with Section 13 in your answer. Examiners like the special resolution and the name proviso mentioned together.
If a question mentions an LLP, switch to the LLP Act, 2008 and do not apply Section 18.
Keep to the wording of the Act. Use phrases like "close the former registration" and "certificate of incorporation in the same manner as its first registration".

Practice questions from Conversion of Business Entities

Section 18: Conversion of Companies Already Registered in other exams

The same ground in other exams, if you are preparing for more than one or want another angle on it.

CMA FinalConversion of Companies

Section 18: Conversion of Companies Already Registered: frequently asked questions

What does Section 18 of the Companies Act, 2013 provide?

It allows a company of any class registered under the Act to convert itself into a company of another class. The conversion is done by altering its memorandum and articles in accordance with Chapter II. The Registrar then closes the former registration and issues a new certificate of incorporation.

Does conversion under Section 18 affect the company's existing debts and contracts?

No. Section 18(3) says registration on conversion does not affect any debts, liabilities, obligations or contracts incurred or entered into before conversion. They can be enforced as if the registration had not been done.

Is a special resolution required for conversion?

Section 18 requires alteration of the memorandum and articles. Section 13(1) requires a special resolution to alter the memorandum. The resolution is filed with the Registrar under Section 13(6).

Is Central Government approval needed to change the name on conversion?

Not where the only change is adding or deleting the word "Private" because of conversion from one class of company to another. This is the proviso to Section 13(2). Any other name change needs written approval of the Central Government.

Is conversion into an LLP covered by Section 18?

No. Section 18 deals with change of class within the Companies Act, 2013. Conversion into an LLP is governed by the LLP Act, 2008, where the company is deemed dissolved and its property vests in the LLP on registration.