Deliberate conversion,statement in lieu of prospectus, Procedure

It is tube noted that a private company which becomes a public company automat icalhi- by vittue of the abo N e provisions need not comply with any legal formality prescribed in the case of deliberate conversion. Again, in spite of the conversion such a company may retain the characteristics of a private company, i.e., it can have restrictions as to transfer of shares, memberslup and public subscnption. it can aontmue to have only to o members and two directors.
Deliberate conversion. A private company may, at any time, pass a special resolution deleting from its articles the three compulsory restrictions as to membership, transfer of shares and public subscriptimi, and then from the date of alternation it becomes a public company Within 3 Q days of passing the resolution referred to above, a copy of special resolution, a copy of altered articles, together with a copy of 'prospectus' or a 'statement in lieu of prospectus' must be filed with the Registrar The 'prospectus' filed must state the matters amd set out the reports specified m "Schedule II" of the Act. 'In case the company decides to file a statement in lieu of prospectus', it must be in the 'form" and contain particulars set out in: "Schedule IV' to the Cmnpames Act (Sec. 44).
Upon becoming a public company, the company will have to increase the number of its members to at least seven and that of its directors to at least three, if .tlready their nnmberwas fewer than the aforesaid statutory minimum required in that connection for a public company Further, the word 'Pnvate' will be deleted from the name of the company
Procedure. First of all a Board meeting shall be convened to finalize the plan of conversion and pass the Necessary resolution The secretary is then instnicted to prepare a new set of ATticles and to inform the members about the place and date of the extrao Dnar general meetirqg, both indict dnaL k as well as through an armo Lncement m the newspaper Same nc the teat of the resolutions to be panel at the- ruing are sem be A::}; all the manbers of the COT: On the hymned doe goal
Thus the first trro stages in the formation of a comfrey e Promotion Stage, and (2) Incorporation stage A private coronae . omunence business as soon as it is registered (incorporated). But a Z, mt company cannot commence business unless it has obtained a CemficaZe Or Commencement of Business from the Registrar Therefore a public comparer has to pass trvo more stages before ttc m commence business; (3) Subscriphon Stage, and (4) Commencement Stage.