Can a company be converted from one type to another?
A company can be converted from one type to another by re-registration within
the terms of the Act. There are procedures for re-registration from private
to public and vice versa and from private limited by shares to unlimited and
vice versa. There is no provision for a company limited by shares to be re-registered
as one limited by guarantee or for the reverse process and there are restrictions
on a company which has previously changed from limited to unlimited or vice
versa changing back again.
Incorporation Services Limited can prepare all the
documentation required for any of the re-registration processes mentioned below
and attend to the re-registration, preparation of memorandum and articles, etc.
On re-registration the company keeps its original company number and remains
the same corporate identity. Re-registration does not affect any existing rights
or liabilities of the company. The registration fee in each case is the same
as that for the formation of a company, £20.
Private company re-registering as public
By CA 1985, sec43 a special resolution must be passed providing that the company
be re-registered as a public company and that the necessary amendments are made
to its memorandum and articles. The special resolution is sent with an application
on form G43(3) signed by a director or secretary together with the following
documents:
(a) memorandum and articles as amended;
(b) a statement by the auditors that in their opinion a balance sheet prepared
as at a date not more than seven months before the application shows that the
company's net assets were not less than the aggregate of its called-up share
capital and undistributable reserves; (c) a copy of that balance sheet with
a copy of an unqualified auditor's report;
(d) if any shares have been allotted other than for cash since the balance
sheet date, a valuation report on the assets accepted as consideration for
the shares;
(e) a statutory declaration on form G43(3) (e) by a director or secretary of the company that:
(i) the special resolution has been duly passed;
(ii) the nominal value of the company's allotted share capital is not less
than the authorised minimum of £50,000; (iii) each allotted share
is paid up to at least one-quarter of its nominal value and the whole of any
premium;
(iv) covering various matters relating to shares issued other than for cash
(on which there are additional provisions);
(v) there has been no change in the financial position of the company between
the balance sheet date and the application by the company for re-registration
that has resulted in the company's net assets becoming less than the aggregate
of its called-up share capital and undistributable reserves.
If the application is in order the company will be issued with a certificate of incorporation stating that it is a public company. On the date of issue of the certificate the company becomes a public company and the alterations to the company's memorandum and articles of association become effective.
Public company re-registering as private (CA 1985, sec53,
sec54, sec55)
A special resolution must be passed that the company be re-registered as a private company and making the requisite changes to the memorandum and articles. Twenty eight days must lapse, during which time any dissenting members may apply to the court. Then an application on form G 53, signed by a director or secretary, must be sent to Companies House with the special resolution and a copy of the memorandum and articles as altered.
Members who oppose the proposed re-registration may apply to the court for cancellation of the resolution within 28 days (provided they did not vote in favour of the special resolution). Such an application may be made by any 50 members or by the holders of at least 5 per cent of the nominal value of the company's issued share capital (or any class thereof). The company must immediately give notice of any such application to Companies House on form G54. If the court makes an order cancelling or confirming the resolution, an office copy of the order must be registered at Companies House. The court has wide powers on hearing such an application.
In the absence of any such application and if satisfied that the company may be re-registered, Companies House will issue a certificate of incorporation for a private company. The company then becomes a private company and the alterations in the memorandum and articles set out in the special resolution become effective.
Private limited company re-registering as unlimited
The following procedure is required for a private limited company to re-register
as an unlimited company (CA 1985, sec49):
The company must send to Companies House an application on form G49 (1) signed
by a director or secretary. The application must set out any necessary alterations
in the memorandum and articles and it must be accompanied by:
(i) a form of assent on form G49(8)(a) to the company being registered as unlimited,
signed by or on behalf of every member;
(ii) a statutory declaration by the directors on form G 49(8)(b) that all the
members have signed the form of assent and that where the form was signed by
an agent that they have taken reasonable steps to satisfy themselves that each
agent was empowered to sign on behalf of the member;
(iii) a copy of the memorandum and articles incorporating the alterations set
out in the application.
If the application is in order Companies House will issue a new certificate
of incorporation and the alterations to the memorandum and articles will be
as valid as if they had been adopted by special resolution: CA 1985, sec50.
Unlimited company re-registering as a company limited by shares or guarantee
An unlimited company may re-register as a private company limited by shares
or guarantee by following the following the procedures in CA 1985, sec51. If
it wishes to reregister as a public company, it must follow the procedures in
sec48. This is so unusual that it is beyond the scope of this database.
It must pass a special resolution to be re-registered and stating whether the
liability of the members is to be limited by shares or by guarantee and, if
the former, the amount of the share capital. It must effect the alterations
to the memorandum and articles.
The special resolution must be sent to Companies House with an application on form G51 signed by a director or secretary, together with a copy of the altered memorandum and articles. If the application is in order Companies House will issue a new certificate of incorporation.
If the company goes into liquidation within three years after re-registration,
any member of the company at the time of re-registration remains liable to contribute
without limit to the assets of the company in respect of debts and liabilities
contracted before it was reregistered: IA 1986, sec77
Subsequent re-registrations
An unlimited company which was previously limited may not reregister as limited
(sec51(2)), nor may a limited company which was previously unlimited change
back again (sec49(2)),
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