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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. Under the Companies Act, 2013, when is this alteration valid?

Conversion of a public company into a private company is valid only if the Central Government approves it by an order, on an application in the prescribed form and manner. A special resolution alone does not make the alteration valid.

  1. AImmediately on passing of the special resolution
  2. BOnly when approved by an order of the Central Government on an application made in the prescribed form and mannerCorrect
  3. COnly when the Registrar of Companies endorses the minutes of the meeting
  4. DOnly after the shareholders pass the resolution a second time within six months

Explanation

The second proviso to section 14(1) says that an alteration converting a public company into a private company is not valid unless approved by an order of the Central Government on an application made as prescribed. The special resolution alone is therefore not enough, which makes the first option wrong.

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