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

Kaveri Foods Limited, a public company, passes a special resolution to alter its articles so that it becomes a private company. When does the alteration become valid?

The conversion of a public company into a private company is valid only when approved by an order of the Central Government on an application made in the prescribed form and manner. The special resolution and filing with the Registrar alone do not make it valid.

  1. AImmediately on passing of the special resolution
  2. BOnce the altered articles are filed with the Registrar within fifteen days, without any approval
  3. COnly when it is approved by an order of the Central GovernmentCorrect
  4. DOnly after the company has been listed on a stock exchange

Explanation

The second proviso to Section 14(1) says an alteration converting a public company into a private company is not valid unless approved by an order of the Central Government. Passing the special resolution and filing the articles alone do not make it valid. Option B ignores that approval.

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