Conversion of Companies Already Registered
Section 18 of the Companies Act, 2013 deals with the conversion of an existing company from one type to another, such as a private company converting into a public company or a company limited by shares converting into a company limited by guarantee, and vice versa. This provision enables companies to adapt to changing business needs by altering their corporate structure while continuing their legal existence.
This section ensures that the company’s obligations and liabilities incurred before the conversion are not affected, and all conversions are subject to the approval of the Registrar of Companies (ROC).
Eligibility for Conversion
🔸 Any company already registered under the Companies Act (1956 or 2013) can apply for conversion.
🔸Applicable to:
➡️ Private to Public or vice versa
➡️Company limited by shares to limited by guarantee or vice versa
➡️Unlimited to limited and vice versa
What Does Section 18 Say?
“A company registered under the Act can convert itself into another type of company by following the proper process. After conversion, a new certificate is issued by the ROC, but the company remains the same legal entity.”
Steps for Conversion
Let’s simplify the process into easy-to-follow steps:
✅ Step 1: Hold a Board Meeting
Decide on the conversion.
Approve the draft MOA and AOA for the new company type.
✅ Step 2: Hold a General Meeting
Pass a special resolution (needs 75% votes) for conversion and changes in MOA & AOA.
✅ Step 3: File Forms with ROC
Form MGT-14 – for special resolution.
Form INC-27 – for conversion request with altered MOA & AOA.
✅ Step 4: Receive New Certificate
The ROC checks documents and if all is good, issues a new Certificate of Incorporation.
✅ Step 5: Update Records
Update company records, PAN, bank details, GST, etc., with the new status.
🚫 Penalties for Non-Compliance
If the company fails to comply, it may face:
1. Rejection of application
2. Penalties under Section 450 (general penalty clause)
3. Delay in obtaining new certificate, affecting business continuity
Documents Checklist
