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Change of Status from a Private to a Public Limited Liability Company
A private company may be converted into a public company merely by the alteration of its Memorandum and Articles of Association so as to incorporate all changes required by the provisions of the Act for a company to hold the status of a public company. Accordingly, the above-mentioned restrictions prescribed in respect of private companies and which conflict with the status of a public company must be deleted or appropriately adjusted. The resolution approving the said adjustments and the conversion must be delivered to the Registrar of Companies for registration together with:
- a copy of a balance sheet prepared as at a date being not more than 4 months before the conversion is effective together with an auditor’s report drawn up in relation thereto; and
- a written statement by the company’s auditors proving that in their opinion, at the balance sheet date, the amount of the company’s net assets was not less than the aggregate of its called up issued share capital and undistributable reserves; and
- a declaration by any director of the company confirming that between the balance sheet date and the date of delivery of the same to the Registrar for registration, there was no change in the company’s financial position which resulted in the amount of its net assets becoming less than the aggregate of its called up issued share capital and undistributable reserves.
The conversion of the company into a public company would be effective once the aforementioned resolution approving the same is registered by the Registrar of Companies. In the interim period subsequent to the balance sheet date and prior to the delivery of the relevant resolution, the company cannot allot or propose to allot shares for a consideration other than in cash.
On the other hand, a public company may change its status to a private company by the approval of all alterations to its Memorandum and Articles of Association incorporating the restrictions prescribed in respect of a private company. The relevant resolution/s approving such alterations must be delivered to the Registrar of Companies for registration together with a declaration made by the directors of the company, confirming that the company is now in conformity with the said prescribed restrictions. The conversion of the company into a private company would be effective once the said resolution approving the same is registered by the Registrar of Companies.
Once a public company is converted into a private company, it would be required to redeem the shares held by the dissenting members if they so request and on such terms as may be agreed or as the court (on a demand of either the company or its dissenting members) deems fit to order.