Earlier, a private company could convert itself into a public company by operation of law under Section 43A. With the addition of Sub-section (11) to Section 43A the concept of deemed public company has been done away with. Hence, after the commencement of the Companies (Amendment) Act, 2000, a private company cannot automatically become a public company on account of Section 43A.
Accordingly, if a company which had become deemed public company by virtue of Section 43A of the Act, decides to become a private company after the commencement of the Amendment Act, such company shall pass an ordinary resolution for change in its name in the memorandum of association. Further, it shall pass a special resolution for alteration of its Articles of Association to contain provisions as per Section 3(1)(iii) including the newly inserted clause (d) pertaining to prohibition on invitation and acceptance of deposits. Thereafter, the company shall inform the ROC that it has become a private company and Registrar
shall substitute the words “Private Company” for the words “Public Company” in the name of the company and make necessary alterations in the certificate of incorporation within four weeks from the date of the application.
Alternatively, if the company (i.e. deemed public company) decides to remain a public company then such deemed public company shall have to increase its number of directors to at least three, and its members at least upto seven and alter its articles of association as applicable to a public company.
Further, pursuant to sub-clause (c) of clause (iv) of Section 3(1) of the Act as amended vide Companies (Amendment) Act, 2000, a private company which is a subsidiary of a company which is not a private company shall become a public company on and from the commencement of the Amendment Act i.e. 13th December, 2000. Therefore, a private company which is subsidiary of a public company shall be a public company.
