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

Which statement best describes the mechanism by which a registered company converts itself into a company of another class under the Companies Act, 2013?

A company converts to another class by altering its memorandum and articles in accordance with the provisions of the relevant Chapter. Section 18(1) provides this route. It does not require dissolution, asset transfer to a new company, or a Registrar-initiated notification without any change to the constitutional documents.

  1. ABy an order of the Tribunal dissolving the company and incorporating a new one
  2. BBy alteration of the memorandum and articles of the company in accordance with the relevant ChapterCorrect
  3. CBy transferring all assets to a newly formed company and winding up the old one
  4. DBy a direct notification of the Registrar without any change in the constitutional documents

Explanation

Section 18(1) provides that a company of any class registered under the Act may convert itself into a company of another class by alteration of its memorandum and articles in accordance with the Chapter. It is not a dissolution and re-incorporation, nor a Registrar-initiated action.

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