PROVISIONS RELATING TO CONVERSION OF PUBLIC COMPANY INTO PRIVATE COMPANY AND VICE VERSA, AND OTHER MATTERS

PROVISIONS RELATING TO CONVERSION OF PUBLIC COMPANY INTO

PRIVATE COMPANY AND VICE VERSA, AND OTHER MATTERS

44. Conversion of public company into private company.- No public

company shall, except with the prior approval of the Commission in writing, and subject to

such conditions as may be imposed by the Commission in this behalf, convert itself into a

private company.

45. Prospectus or statement in lieu of prospectus to be filed by

private company on ceasing to be private company.- (1) If a company, being a

private company, alters its articles in such a manner that they no longer include the

provisions which, under clause (28) of sub-section (1) of section 2, are required to be

included in the articles of a company in order to constitute it a private company, the

company—

(a) shall, as on the date of the alteration, cease to be a private company; and

(b) shall, within a period of fourteen days after the said date, file with the

registrar either a prospectus or a statement in lieu of prospectus as

specified in sub-section (2) or sub-section (3).

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(2) Every prospectus filed under sub-section (1) shall state the matters

specified in section 1 of Part I of the Second Schedule and set out the reports specified in

section 2 of that Part, and the said sections 1 and 2 shall have effect subject to the

provisions contained in section 3 of that Part.

(3) Every statement in lieu of prospectus filed under sub-section (1) shall be

in the form and contain the particulars set out in section 1 of Part III of the Second

Schedule and, in the cases mentioned in section 2 of that Part, set out the reports specified

therein, and the said sections 1 and 2 shall have effect subject to the provisions contained

in section 3 of that Part.

(4) Where the persons making any such report as is referred to in subsection

(2) or sub-section (3) have made therein, or have, without giving the reasons

indicated therein, made any such adjustments as are mentioned in clause 36 of Part I of

the Second Schedule or clause 5 of section 3 of Part III of the Second Schedule, as the

case may be, the prospectus or statement in lieu of prospectus filed as aforesaid shall

have endorsed thereon or attached thereto a written statement, signed by those persons,

setting out the adjustments and giving the reasons therefor.

(5) If default is made in complying with the provisions of any of preceding

sub-sections, the company, and every officer of the company who is in default, shall be

punishable with fine which may extend to five thousand rupees and to a further fine not

exceeding one hundred rupees for every day after the first during which the default

continues.

(6) Where any prospectus or statement in lieu of prospectus filed under subsection

(1) includes any untrue statement, any person who authorised the filing of such

prospectus or statement shall be punishable with imprisonment for a term which may

extend to two years, or with fine which may extend to ten thousand rupees, or with both,

unless he proves either that the statement was immaterial or that he had reasonable

ground to believe and did, upto the time of the filing of the prospectus or statement,

believe, that the statement was true.

(7) For the purposes of sub-section (6),—

(a) a statement included in a prospectus or a statement in lieu of prospectus

shall be deemed to be untrue if it is misleading in the form and context in

which it is included; and

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(b) where the omission from a prospectus or a statement in lieu of prospectus

of any matter is calculated to mislead, the prospectus or statement in lieu

of prospectus shall be deemed, in respect of such omission, to be a

prospectus or a statement in lieu of prospectus in which an untrue

statement is included.

(8) For the purposes of sub-section (6) and clause (a) of sub-section (7), the

expression "included" when used with reference to a prospectus or statement in lieu of

prospectus, means included in the prospectus or statement in lieu of prospectus itself or

contained in any report or memorandum appearing on the face thereof, or by reference

incorporated therein.

46. Consequence of default in complying with conditions constituting a

company a private company.- Where the articles of a company include the provisions

which, under clause (28) of sub-section (1) of section 2, are required to be included in the

articles of a company in order to constitute it a private company, but default is made in

complying with any of those provisions, the company shall cease to be entitled to the

privileges and exemptions conferred on private companies by or under this Ordinance, and

this Ordinance shall apply to the company as if it were not a private company:

Provided that the Commission, on being satisfied that the failure to comply with

the conditions was accidental or due to inadvertence or to some other sufficient cause, or

that on other ground it is just and equitable to grant relief, may, on the application of the

company or any other person interested and on such terms and conditions as seem to the

Commission just and expedient, order that the company be relieved from such

consequences as aforesaid.