NISHANT

The moment a private limited company passes a special resolution converting itself into a public limited company in terms of section 21 read with section 31, the Registrar of Companies has no authority to make any decision in regard to conversion

NISHANT MEHROTRA 25 Jan 2018

The moment a private limited company passes a special resolution converting itself into a public limited company in terms of section 21 read with section 31, the Registrar of Companies has no authority to make any decision in regard to conversion

SC :: in Ram Parshotam Mittal and another v. Hillcrest Realty Sdn. Bhd. and others :: Companies Act, 1956 – Sections 21 and 87(2)(b) – The moment a private limited company passes a special resolution converting itself into a public limited company in terms of section 21 read with section 31, the Registrar of Companies has no authority to make any decision in regard to conversion. The very fact the Form  23 has been filed along with resolution in terms of section 192 coupled with the fact that a statement in lieu of prospectus, which is required to be filed by a private limited company when it converts into a pubic limited company, has been filed, is sufficient for the purpose of arriving at a prima facie conclusion that the private limited company has altered its status and has become a public limited company even though the necessary alteration has not been effected in the records of the Registrar of Companies. On conversion into a public limited company, its cumulative preference shareholders, whom dividend was not paid for two years, would acquire voting rights on every resolution placed before the company at any meeting by operation of clause (i) of sub-section (2)(b) of section 87 read with Explanation thereto. 

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