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Converting a public company to a Private Limited Company in India primarily offers simplified compliance, increased operational flexibility, enhanced confidentiality, and reduced operational costs.
Therefore, for a public company to be eligible for conversion, its number of shareholders must be reduced to not more than 200 (the maximum limit for a private company) before applying for conversion. This often involves buy-back of shares, transfer of shares, or other mechanisms to bring the shareholder count down. Simply having two shareholders at the time of conversion is insufficient if the public company currently has more than 200.
The conversion must be approved by a resolution passed by the shareholders of the public company
There is no minimum paid-up capital requirement for a Private Limited Company (or a Public Limited Company). So, a public company of any paid-up capital (even if very low) can convert, provided it meets other criteria.
The public company must be in compliance with all relevant regulations, including those related to the filing of annual financial statements and tax returns
The public company must not be in default with regard to any of its obligations under the Companies Act or other relevant regulations
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