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22 Change from public to private and from private to public company

Change from public to private and from private to public company

Section 26(1) of the Act states that a public company having a share capital may convert to a private company by lodging with the Registrar a copy of a special resolution –

(a) determining to convert to a private company and specifying an appropriate alteration to its name; and

(b) altering the provisions of its memorandum or articles so far as is necessary to impose the restrictions limitations and prohibitions referred to in Section 15(1).

Section 26(2) of the Act provides that a private company may, subject to anything contained in its memorandum or articles, convert to a public company by lodging with the Registrar –

(a) a copy of a special resolution determining to convert to a public company and specifying an appropriate alteration to its name;

(b) a statement in lieu of prospectus; and

(c) a statutory declaration in the prescribed form verifying that Section 52(2) (b) has been complied with, i.e that every director of the company has paid to the company on each of the shares taken or contracted to be taken by him and for which he is liable to pay in cash, a proportion equal to the proportion payable on application and allotment on the shares payable in cash.

and thereupon the restrictions, limitations and prohibitions referred to in subsection 15(1) as included in or deemed to be included in the memorandum or articles of the company shall cease to form part of the memorandum or articles.
Section 26(3) of the Act states that on compliance by a company with subsection (1) or (2) and on the issue of a certificate of incorporation of the company altered accordingly the company shall be a private company or a public company (as the
case requires).

Section 26(4) states that a conversion of a company following subsection (1) or (2) shall not affect the identity of the company or any rights or obligations of the company or render defective any legal proceedings by or against the company, and any legal proceedings that could have been continued or commenced by or against it prior to the conversion may, notwithstanding any change in the company’s name or capacity in consequent of the conversion, be continued or commenced by or against it after the conversion.

The effect of Section 26(4) of the Act is that the conversion of the company does not affect its identity, obligations and liabilities under contract.

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Change from public to private and from private to public company Copyright © 2011 by Wawasan Open University. All Rights Reserved.

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