IN RE Vs. NOVOFLEX CABLE CARE SYSTEMS LIMITED

JUDGEMENT

(1.) This Company Petition is filed under sub section (1) of Section 14 of the Companies Act, 2013 (Act, 2013) , seeking approval of this Tribunal to the conversion by altering the Articles of Association, as sought to be effected by a Special Resolution passed at the Extra-Ordinary General Meeting (EOGM) held on 05.09.2016, for the change of status of the Company from "Public Limited Company" to " Private Limited Company".

(2.) Rule 68 of the NCLT Rules, 2016 stipulates filing of a petition under sub-section (1) of section 14 of the Companies Act, 2013 for the conversion of a public company into a private company, in the prescribed format and the manner accompanied by such documents/information and requisite filing fee as mentioned in the said Rule. The instant Company Petition has been filed in terms of the said Rule.

(3.) The brief facts that emerged from the petition are that the Company was incorporated as a Company limited by shares on 05.11.1993 under the provisions of the Companies Act, 1956 under the name and style of Novoflex Cable Care Systems Private Limited. The name of the Company was changed to "Novoflex Cable Care Systems Limited" on 05.09.2002. The authorised share capital of the Company is Rs.4,24,00,000/- and the issued subscribed and paid-up capital of the Company is Rs.73,73,400/-. The Board of Directors of the Company comprises of 3(Three) Directors and there are 6 (six) shareholders holding 2,49,140 equity shares of Rs.10/- and 2 (Two) shareholders holding 48,820 shares of Rs.100/- each. The company is stated to have engaged in the business of trading. The Board of Directors of the petitioner Company has passed a resolution at the meeting of the Board on 08.08.2016, approving the proposed alteration of the Articles of Association of the Company and decided to call an EOGM of the Members of the Company on 05.09.2016 to obtain consent on this line. After due notice to the members, EOGM has been called and held on 05.09.2016 A Special Resolution has been passed at the said EOGM pursuant to the section 13 & 14 of the Companies Act, 2013 and other applicable provisions and rules made thereunder, for conversion of the Company into a "Private Limited Company" and name of the Company be changed from "Novoflex Cable Care Systems Limited" to "Novoflex Cable Care Systems Private Limited" by addition of the word "Private" before the word 'Limited'. A new set of Articles of Association, as applicable to the Private Limited Company, has also been approved by the members and adopted the new set of Articles of Association of the Company. The reason for conversion into Private Limited Company, as claimed in the petition, is that the Company has no plan to bring in any new partner or public at large as the stakeholder and it was considered that for that purpose the Company needs to be converted into a private limited company for the operational case and other advantages that are available to private companies as in comparison to a public limited company. Although the Company is a limited one, but its shares are held closely. The Company has neither issued shares to public nor has any intention in future also to offer shares to the public. The conversion of the petitioner company into a private company shall not affect any debts, liabilities, obligation or contracts incurred or entered into, by or on behalf of the company before conversion and such debts, liabilities, obligations and contracts may be enforced in the manner as if such conversion had not been done. Formalities that are to be complied with by Public Limited Companies on legal angle are much greater than the formalities to be complied with by Private Limited Companies. Directors of the Company find that no purpose would be served by retaining the Public Limited character of the Company. This conversion from public limited company to private limited company is aimed at to carry on the business of the petitioner Company more economically & efficiently, conveniently, better management and smooth functioning of various operations of the Company.