Public to private company conversion is the process by which an unlisted public company alters its articles to take on the restrictions of a private company and applies for approval to become one. It is governed by Section 14 of the Companies Act, 2013 and Rule 41 of the Companies (Incorporation) Rules, 2014. You pass a special resolution, apply to the Regional Director in Form RD-1, and, once the order is received, file Form INC-27 with the Registrar of Companies. It is a regulated process with public notice and creditor protection, not a simple name change.
What is public to private company conversion?
A public company can have unlimited members, free transfer of shares and the ability to invite the public to invest. A private company limits the number of members to 200, restricts share transfer through its articles and cannot invite the public. Section 14 of the Companies Act, 2013 lets a company alter its articles to move between the two, and Section 18 deals with the conversion of the class of company.
The key difference from the reverse conversion is protection of outsiders. The second proviso to Section 14(1) says an alteration that has the effect of converting a public company into a private one does not take effect without the approval of the Central Government, and that power is exercised through the Regional Director under Rule 41. Before the 2015 amendment the approval was given by the Company Law Board or Tribunal. Today the application goes to the Regional Director in Form RD-1.
After the shareholders approve, the company must publish notice in an English and a vernacular newspaper, inform creditors and regulators, and file RD-1 with documents such as the altered articles, the creditors list and affidavits. Once the Regional Director approves, the company files INC-27 with the ROC, which issues a fresh certificate of incorporation. Listed companies need to delist first under SEBI rules, so this page is about unlisted public companies.
Who should convert a public company into a private company?
Conversion is optional. It is considered by companies that no longer need the public-company framework, such as:
- Unlisted public companies that were set up as public but never raised money from the public
- Companies with only a handful of shareholders that want fewer governance requirements
- Family or promoter-run businesses that want to restrict share transfers to the existing group
- Subsidiaries that were public companies because of earlier group structures and now want simpler compliance
- Companies that want the exemptions available to private companies, for example on loans, remuneration and board composition
- Businesses that want to control who becomes a shareholder through articles rather than market transfers
Benefits of Public to Private Company Conversion
Lower compliance burden
Private companies enjoy many exemptions from the Act, which reduces board, committee and disclosure requirements.
Control over shareholders
The articles can restrict share transfers, which helps promoters keep ownership within a defined group.
Fewer minimum requirements
A private company needs two directors and two members, rather than three directors and seven members.
Simpler management
Rules on managerial remuneration and loans to directors are less restrictive, subject to the Act, giving more flexibility.
Cost savings
Reduced secretarial and governance work usually lowers recurring cost, although the one-time conversion has its own filing and advertising cost.
Eligibility & conditions for conversion
Rule 41 sets out what the Regional Director looks at. The main conditions are:
- The company is an unlisted public company; a listed company cannot use this route without first completing delisting
- A special resolution of the members approves the alteration of the memorandum and articles to include private-company restrictions
- The company applies in Form RD-1 within sixty days of passing the special resolution
- The company has filed financial statements and annual returns up to date, with the creditor list prepared as on a date within thirty days of the application
- Notice of the application is published in English and vernacular newspapers and sent to creditors, debenture holders, the Regional Director, the Registrar and the sectoral regulator, at least twenty-one days before filing
- The company has declared that the number of members will not exceed two hundred and it does not accept deposits in breach of the private-company rules
- No inquiry, inspection, investigation or prosecution is pending against the company under the Act, which bars the application under Rule 41
Documents required
Corporate approvals
- Board resolution approving the conversion and calling the general meeting
- Notice of the general meeting with explanatory statement
- Certified copy of the special resolution, with minutes recording any dissenting members
- Altered articles of association and, if required, altered memorandum
For the RD-1 application
- Statement of creditors prepared as of a date within thirty days of the application, with an affidavit by a director that it is true
- Copies of the newspaper advertisements in English and a vernacular newspaper
- Proof of notice to creditors, debenture holders, the Regional Director, the Registrar and any regulator
- Declaration or affidavit of directors and key managerial personnel on the conditions in Rule 41, including the 200-member limit and deposits
- Latest financial statements and details of shareholders and shareholding pattern
After approval
- Order of the Regional Director approving the conversion
- Form INC-27 with the altered memorandum and articles and the SRN of RD-1
- Fresh certificate of incorporation issued by the Registrar
Step-by-step conversion process
The steps below follow Rule 41 as it stands after the amendments of 2018, 2021, 2023 and 2025. Because the forms and attachments were revised in January 2023 and the 2025 amendment was not reviewed in detail, check the portal before filing.
Check eligibility and listed status
Confirm that the company is unlisted, that no inquiry, inspection, investigation or prosecution is pending, and that the number of members is within 200 after excluding employees as per the Act.
Hold the board meeting
Approve the conversion, the altered articles and the notice of a general meeting, and authorise a director to sign filings.
Pass the special resolution
Hold the general meeting, pass a special resolution to alter the articles by inserting the private-company restrictions and to change the name, and record any dissent in the minutes.
File Form MGT-14
File the special resolution with the ROC within thirty days. Keep the SRN for reference in later forms.
Prepare creditor list and advertise
Prepare the creditor statement and affidavit, publish notice in an English and a vernacular newspaper and send notice to creditors, debenture holders, the Regional Director, the Registrar and any regulator, at least twenty-one days before filing.
File RD-1 within sixty days
Apply to the Regional Director in Form RD-1 with the altered documents, creditor list, affidavits, proofs of notice and declarations.
Respond to RD queries
If the Regional Director has no objection, approval is to be given within thirty days. If defects are noted, the company has thirty days to cure and can resubmit, with a limit on the number of resubmissions. Objections may lead to a hearing.
File INC-27 and get the fresh certificate
Within fifteen days of the Regional Director's order, file INC-27 with the altered memorandum and articles and the RD-1 SRN. The ROC then issues a fresh certificate of incorporation.
Government fees
Fees are payable on Form MGT-14, Form RD-1 and Form INC-27, and they can depend on the authorised capital. The advertisement in two newspapers is an additional out-of-pocket cost. Because the fee tables have changed over time and we have not verified the current schedule against the official portal for this page, we do not state figures.
Professional charges are quoted separately after reviewing your case. Government fees are paid directly to the authority.
How long does conversion take?
Conversion is slower than the reverse. The twenty-one day notice before filing, the sixty-day outer limit for RD-1, the Regional Director's review and the fifteen days for INC-27 are all sequential. Rule 41 expects approval within thirty days if there is no objection, but queries and objections can extend this. Plan for a multi-week to multi-month project.
| Stage | Typical time |
|---|---|
| Board meeting, general meeting and MGT-14 | MGT-14 within 30 days of the resolution |
| Advertisement and creditor notices | At least 21 days before filing RD-1 |
| RD-1 filing | Within 60 days of the special resolution |
| Regional Director decision | Within 30 days if no objection; longer if queries or hearing |
| INC-27 after the order | Within 15 days of the RD order |
Validity & what continues after conversion
The company remains the same legal entity. Its assets, liabilities, contracts and registrations continue, and the Registrar issues a fresh certificate of incorporation showing the new name and class. Update the new certificate with banks, tax authorities and counterparties, and keep the Regional Director's order and the newspaper clippings in the statutory records.
Compliance after conversion
- Observe the 200-member limit, the restriction on share transfer and the bar on inviting the public in the articles
- Continue filing annual financial statements and the annual return; see ROC annual filing
- Review deposits, loans and related-party arrangements against the rules for private companies; see secretarial records
- Keep minimum two directors and two members, and DIN KYC current; see DIR-3 KYC
- Update the name with PAN, GST, banks, licences, trademark and contracts
- Reconsider auditor appointment and director changes that may follow from the new class; see auditor appointment
- File any other forms required by the Regional Director's order within the time given
Private to public vs public to private conversion
| Point | Private to public | Public to private |
|---|---|---|
| Main provision | Sections 13, 14, 18; Rule 33 | Section 14 second proviso; Rules 33 and 41 |
| Shareholder approval | Special resolution | Special resolution |
| Regulatory approval | No separate approval; filing with ROC | Regional Director approval in Form RD-1 |
| Public notice and creditors | Not required by the conversion rule | Advertisement and notices to creditors, regulators and others |
| Final filing | INC-27 with MGT-14 | INC-27 within 15 days of RD order |
| Typical effort | Mainly internal governance steps | Longer, with notice periods and RD review |
Common mistakes & rejection reasons
Missing the sixty-day window
RD-1 has to be filed within sixty days of the special resolution. If the advertisement and creditor work run late, the resolution may need to be passed again.
Creditor list too old
The creditor statement must be prepared as of a date within thirty days before the application. A stale list is a common cause of a defect letter.
Incomplete notice
Notice must go to creditors, debenture holders, the Regional Director, the Registrar and any regulator, besides the newspaper advertisement. Missing proof of any one invites queries.
Pending proceedings
An inquiry, inspection, investigation or prosecution under the Act bars the application. Check before incurring costs.
Ignoring dissenting members
The minutes must record dissent and the company should be ready for a hearing if members or creditors object.
Filing INC-27 late
The form must be filed within fifteen days of the Regional Director's order, with the RD-1 SRN and the altered documents.
Penalties for non-compliance
Conversion is voluntary, so there is no penalty for staying public. The risks are in the process: an alteration of articles that effects the conversion does not take effect without approval, late MGT-14 attracts additional fees, and false statements in affidavits or declarations can lead to action under the Act. The exact penalties should be confirmed from the Act and the Rules for your case.
Practitioner tips
- Prepare the creditor list and advertisement while the general meeting notice is going out. These items decide whether RD-1 meets the sixty-day limit.
- Draft the newspaper notice to cover the Rule 41 contents and keep the full-page clippings with date and name of each paper for upload.
- Check whether any shareholder will dissent. A company with likely objectors should prepare for a hearing and for requests for more information from the Regional Director.
- Review debentures, deposits and loan agreements first; their holders get notice and can object, and some have consent rights.
- Prepare the INC-27 package in parallel so it can be filed as soon as the order is received, since only fifteen days are available.
How Lawgical Guru helps
Eligibility and risk check
We review listed status, pending proceedings, member count, deposits and creditors against Rule 41 before you start.
Resolutions and altered articles
We draft the board resolution, general meeting notice, special resolution and the private-company articles; see also private limited company registration.
RD-1 package
We prepare the creditor statement, affidavits, declarations and notice proofs and file RD-1 with the Regional Director.
Responding to the Regional Director
We help respond to defect letters and, where needed, to hearing notices within the time allowed.
INC-27 and post-conversion updates
We file INC-27 within the window and support updates to registrations and ROC annual filing.
Public to Private Company Conversion: frequently asked questions
How can a public company be converted into a private company?
Pass a special resolution to alter the articles, file MGT-14, publish notice and inform creditors, then apply to the Regional Director in Form RD-1 within sixty days. After the order, file INC-27 with the ROC within fifteen days. The ROC issues a fresh certificate of incorporation.
Is NCLT approval required for public to private conversion?
No. Approval earlier came from the Company Law Board or the Tribunal, but after the 2015 amendment to Section 14 it is the Central Government, exercised through the Regional Director. The application is made in Form RD-1 under Rule 41, not to NCLT.
Which form is filed with the Regional Director?
Form RD-1 under Rule 41 of the Companies (Incorporation) Rules, 2014. The form was substituted in January 2023. Filing includes the altered articles, creditor list, affidavits and proof of notices, so the portal checklist should be followed carefully.
What is the time limit to file RD-1?
Rule 41 requires the application to be filed within sixty days of passing the special resolution. The newspaper notice and notices to creditors and regulators must have been given at least twenty-one days before filing, so these steps should be started immediately after the meeting.
Can a listed public company become private?
Not directly through this route. A listed company would first have to delist its shares under SEBI regulations and stock exchange rules and then become an unlisted public company, after which the conversion under Section 14 and Rule 41 can be considered.
Are newspaper advertisements compulsory?
Yes. Rule 41 requires notice in an English newspaper and a vernacular newspaper circulating in the district of the registered office, apart from notices to creditors, debenture holders, the Regional Director, the Registrar and any sectoral regulator. Keep the clippings for filing.
When is conversion barred?
Rule 41 does not allow the application where an inquiry, inspection or investigation has been initiated against the company under the Act, or where a prosecution is pending. Check the company's status carefully before starting the process.
What happens to shareholders who object?
Their dissent is recorded in the minutes and may be raised before the Regional Director, who can call a hearing. The special resolution can still be effective, but the Regional Director considers objections of members, creditors and regulators before approving.
How many members can a private company have?
A private company can have at most two hundred members, excluding persons who are employees and certain former employees who continue to be members. It needs a minimum of two members and two directors. The company must give a declaration on this when applying.
How long does conversion take?
There is no fixed total. Rule 41 expects the Regional Director to approve within thirty days if there is no objection, but the notice period, preparation of the creditor list and any queries add time. Expect more time than for a private to public conversion.
Reviewed by Satyam Gupta, Company Secretary (CS) & Advocate
8+ years of industry experience. This page was last reviewed on 16 October 2026 against the official sources below. Rules and fees change — confirm on the official portal before you apply.