Convert Public Limited to Private Limited Company
An unlisted public company can convert to a private limited company by altering its articles, but only with the approval of the Regional Director. RD-1 is due within 60 days of the special resolution. We handle the meeting papers, the advertisement, the RD application and the final INC-27 filing.
What it is
Converting a public company into a private company changes its class. The articles must now carry the three restrictions that define a private company: limits on the transfer of shares, a cap of 200 members (employees not counted) and a ban on inviting the public to subscribe to its securities. The word “Private” is also added to the name.
The law is Section 14 of the Companies Act, 2013. The alteration needs a special resolution and, under the second proviso to Section 14(1), the approval of the Central Government, a power exercised by the Regional Director. The application is made in Form RD-1 on the MCA V3 portal, and the ROC then registers the conversion through Form INC-27 under Rule 33 of the Companies (Incorporation) Rules, 2014.
Who it applies to
Closely held public companies
Picture a Faridabad auto-parts company that registered as a public company in 2012 for prestige, still has only family shareholders and files public-company paperwork every year. That is the typical company that decides to convert public limited to private limited.
Unlisted companies only
A listed company must complete delisting first. The RD-1 application carries a declaration that the shares are not listed on any stock exchange.
Companies with 200 members or fewer
A private company cannot have more than 200 members, excluding employees. If you have more, bring the register down before you start.
Why it matters
Smaller board and membership
When you convert public limited to private limited, the minimum drops to two directors and two members. A public company needs three directors and seven members.
Lighter compliance
Private companies enjoy the exemptions notified on 5 June 2015, such as not filing certain board resolutions in MGT-14, and may qualify as small companies with simpler annual filings.
Owners keep control
The articles can restrict share transfers, so shares cannot pass to outsiders without the board’s approval.
Documents required
Meeting papers
- Board resolution and notice of the general meeting with explanatory statement
- Certified copy of the special resolution and minutes
- Altered memorandum and articles
For the RD-1 application
- List of members, directors, creditors and debenture holders
- Copy of the INC-25A newspaper advertisement
- Declarations on membership count, deposits, pending proceedings and listing status
- Latest audited financial statements
From the company
- Annual filings up to date
- Valid digital signature certificate of a director
- Proof that notices reached creditors and debenture holders
Public vs private company at a glance
| Public company | Private company | |
|---|---|---|
| Minimum members | 7 (Section 3(1)(a)) | 2 (Section 3(1)(b)) |
| Maximum members | No limit | 200, excluding employees (Section 2(68)) |
| Minimum directors | 3 (Section 149(1)) | 2 |
| Share transfer | Freely transferable (Section 58(2)) | Restricted by the articles |
| Public offer of securities | Allowed through a prospectus (Section 23(1)) | Not allowed |
Going the other way? See our page on converting a private company to a public company, which needs no Regional Director approval.
How it works
Check eligibility and redraft the articles
First, we confirm the company is unlisted, has 200 members or fewer and is up to date on filings. We then redraft the articles with the private-company restrictions.
Pass the special resolution
The board approves the proposal and calls a general meeting on 21 clear days’ notice. A special resolution needs votes in favour at least three times the votes against.
File MGT-14 within 30 days
The special resolution, explanatory statement and altered documents go to the ROC in MGT-14 within 30 days under Section 117.
Advertise and serve notices
At least 21 days before filing RD-1, the company publishes Form INC-25A in an English newspaper and a vernacular newspaper. It also writes to creditors, debenture holders, the Regional Director and the Registrar.
File RD-1 and answer queries
RD-1 goes in within 60 days of the special resolution. If the Regional Director raises queries or hears an objection, we prepare the replies.
File INC-27 and update records
Within 15 days of receiving the order, we file INC-27 quoting the RD-1 SRN, with the altered e-MoA and e-AoA. The ROC then issues a fresh certificate of incorporation.
Timelines
MGT-14: 30 days
From the date of the special resolution, under Section 117(1).
RD-1: 60 days
From the date of the special resolution, with the advertisement and notices sent at least 21 days before filing.
INC-27: 15 days
From receipt of the Regional Director’s order, quoting the RD-1 SRN with the altered e-MoA and e-AoA.
What happens if you miss it
The resolution goes stale
Here is the catch: if RD-1 is not filed within 60 days of the special resolution, the company has to call a fresh general meeting and pass the resolution again.
MGT-14 penalties
Late MGT-14 attracts 2× to 12× the normal fee. Section 117(2) adds ₹10,000 plus ₹100 a day, up to ₹2 lakh for the company and ₹50,000 for each officer in default.
The company stays public
In practice, until INC-27 is processed and the fresh certificate issued, the company remains a public company with every public-company obligation.
Frequently asked questions
Who approves the conversion of a public company into a private company?
The Regional Director, using the Central Government’s power under the second proviso to Section 14(1). The company applies in Form RD-1 within 60 days of the special resolution. After the order, the ROC registers the change on INC-27 filed within 15 days. We handle queries from the RD’s office.
Can a listed company convert into a private company?
Not while it is listed. The RD-1 application carries a declaration that the shares are not listed on any stock exchange, and a private company cannot invite the public to subscribe to securities. A listed company must first complete delisting under SEBI’s rules. Once it is delisted, the normal conversion process applies.
Do creditors have to agree to the conversion?
They must be told, and they can object. At least 21 days before filing RD-1, the company sends notice to creditors and debenture holders and publishes Form INC-25A in two newspapers. Any objection is considered by the Regional Director. A company that has kept creditors informed and its dues current seldom faces a serious objection.
How many members can a private company have?
Up to 200, and employees do not count and former employees who became members while employed. Section 2(68) sets the cap. Joint holders count as one member. If your public company has more than 200 members, buy out or transfer small holdings before the conversion. Once the register is within the limit, the process continues normally.
Do I need to change the company name?
Yes. The word “Private” is added before “Limited”, for example from “ABC Limited” to “ABC Private Limited”. Under the proviso to Section 13(2), no separate Central Government approval is needed where this is the only name change. The ROC issues a fresh certificate of incorporation, and the name changes only from the date of that certificate.
Which forms are involved in the conversion?
Four main forms. MGT-14 for the special resolution within 30 days, INC-25A for the newspaper notice, RD-1 for the Regional Director’s approval within 60 days and INC-27 within 15 days of the order. If you reduce the board, DIR-12 follows. We prepare and file each form on the MCA V3 portal in the right order.
Can a private company have just two directors?
Yes. Section 149(1) requires at least two directors for a private company, against three for a public company. If your board has three or more, it can stay as it is. If you want to reduce it, directors resign or the board records the change, and the company reports it in DIR-12 within 30 days.
What happens if I miss the 60-day RD-1 deadline?
The special resolution lapses for this purpose, and the company must hold a fresh general meeting and pass it again. You also repeat the advertisement cycle. The cost is time, and it is avoidable. We diarise the 60 days from the resolution date and plan the advertisement for at least 21 days before filing.
What it costs
Our fee plus the government fee that applies to your case, quoted before you commit. Tell us the situation and we will price it exactly.
Government costs to convert public limited to private limited depend on your authorised capital and include the RD-1 and INC-27 fees and MGT-14, which carries a normal fee of ₹200 to ₹600 by authorised capital. Newspaper advertisement charges are paid to the publishers.
Ready to begin?
Send us your member count, creditor list and latest filings, and we will tell you whether your public company can go private and what the steps will be.