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

Sunrise Foods Private Limited, a company registered under the Companies Act, 2013, wishes to convert itself into a company of another class under the Act. Under Section 18, how is this conversion carried out?

Under Section 18(1), a registered company converts into another class of company by altering its memorandum and articles in accordance with the provisions of the Chapter. No winding up or fresh incorporation is needed, and a bare board resolution is not sufficient.

  1. ABy alteration of its memorandum and articles in accordance with the provisions of the relevant ChapterCorrect
  2. BBy winding up the company and incorporating a fresh company with the same name
  3. CBy a simple board resolution with no change to the memorandum or articles
  4. DBy an order of the Supreme Court sanctioning the change of class

Explanation

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 in accordance with the provisions of the Chapter. Winding up is not required, and a board resolution alone cannot achieve the conversion because the constitutional documents must be altered.

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