It is easier for a public company to be re-registered as a private limited company than the other way round. A company must pass a special resolution by which it resolves to re-register as a private company and removes the words 'public limited company' from its name and replaces them with 'limited'; and make any other alterations to the memorandum and articles of the company to suit its new circumstances.
The special resolution must be filed within 15 days will normally be filed with the application (on form 53) signed by a director or the company secretary seeking the re-registration (which will be accompanied by a primed copy of the altered memorandum and articles).
One consequence of d public company re-registering as a private company is that its securities may be less easily transferred. Therefore, protection has to be given to minority shareholders in case they object to this change in the status of the company. In any event, the Registrar of Companies will not normally issue a certificate confirming the re-registration until 28 days after the passing of the special resolution.
The company law gives minority shareholders a right to apply to the court within the 28 day period to have the resolution cancelled. Such an application for cancellation can only be made by shareholders holding not less than 5% of the nominal value of the company's issued share capital or for any class of the share capital, if there is more than one or not less than 50 of the company's members.
The application for cancellation can only be made by a person who has not consented to or voted in favour of the resolution and the court can make an order either cancelling or confirming the resolution on such terms and conditions as it thinks fit which could include ordering that the company should buy the shares of the dissentient members.
Re- registering a private company as a public company is always a voluntary act. However, in two circumstances, a public company can he compulsorily re-registered as a private company.
If the court makes an order confirming a reduction of capital of a public company which results in the nominal value of the company’s allotted share capital falling below the authorised minimum of £50,000 the company ceases to be a public company. In these circumstances, the court can make an order to the effect that the company will be re-registered as a private company (making consequential amendments to the memorandum and articles of the company) which will avoid the necessity for the company to pass a special resolution to re-register.
The other circumstance is the cancellation by a public company of shares will lead to the company having to apply to be re-registered as a private company if the cancellation reduces the company's allotted share capital below the statutory authorised minimum of £50,000.
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