Is conversion of a Company from the company limited by shares to company limited by guarantee without share capital allowed under Section 18 of the Companies Act, 2013? – Azim Premji Trust Services Pvt. Ltd. – NCLT Bengaluru Bench
In this case, ROC objected the conversion from the company limited by shares to company limited by guarantee without share capital that no rules have been provided for conversion of a company limited by shares into company limited by guarantee.
Hon’ble NCLT Bengaluru Bench held that merely because the rules have not yet been notified for the conversion of the company limited by shares into a company limited by guarantee, it does not mean that such conversion cannot be allowed when it is allowable under the provisions of Section 18 of Companies Act, 2013. This is essentially covered within the scope of ‘arrangement’ between the company and its members, and under Section 2(21) of the Act, such company limited by guarantee prescribed for an undertaking to be given by the members to contribute to the assets of the Company in the event of its being wound up.
