CONVERSION OF A PRIVATE COMPANY TO A PUBLIC COMPANY

Section 30 of the Companies Act stipulates the features of a private Company which distinguish it from a public company. These features must be included in the articles of a private company.  Under the section, a private company is a company which by its articles –

                -          restricts the right to transfer its shares;

                -          limits the number of its members to fifty; and

           -          prohibits any invitation to the public to subscribe for any shares or debentures of the company.

In order to re-register as a public company, the private company must alter its articles of association by a special resolution with the effect of:

                       -          not restricting the right to transfer shares;

                       -          not limiting the number of members to fifty;

                       -          not prohibiting any invitation to the public to subscribes for its shares and debentures.

The alteration effectively converts the private company to a public company. The company thus ceases to be a private company from the date of the alteration.

Within 14 days from the date of the alteration, the company should deliver to the Registrar a statement in lieu of prospectus. The form of the statement in lieu of prospectus is provided under Part I of the second schedule. The statement in lieu of prospectus must also contain the reports specified in part II of the second schedule.