In Re: Radiant Chemical Company Ltd.

Harries, C.J.—This is an appeal under the Letters Patent from a decision of Agarwala J. sitting on the original side in company matters. An application was made to him to confirm certain amendments in the memorandum and articles of association of the Radiant Chemical Company, which application was dismissed. Under the Letters Patent the company has a right of appeal to this Bench. The company was incorporated on 24th November 1939, and it was undoubtedly at its incorporation a public company. On 22nd July 1940, the directors at a meeting decided that the company should be changed from a public one into a private one. On 25th August 1940, an extraordinary meeting of the share-holders was held, and certain amendments were made in the memorandum and articles by a resolution. A copy of these amendments was sent to the Registrar of Joint Stock Companies. On 11th January 1941, the registrar informed the company that confirmation of this Court was necessary for the amendments. On 27th February 1941, an application was filed in this Court praying for confirmation of the amendments so made. The matter came before the company Judge on 3rd March 1941, and the learned Judge held that the memorandum of association could not be altered in the way proposed, and further that the company could not change its nature from a public to a private company by such amendments. Ho accordingly declined to confirm the alterations or amendments and dismissed the application.

Whilst this application was pending, an extraordinary general meeting of share-holders was held when a certain resolution was passed unanimously as a special resolution. That resolution provides merely for amendments of the articles of association and in no way affects the memorandum. It is urged by Mr. K.N. Lal on behalf of the company that the effect of this resolution of 21st July 1942, i3 to convert what was a public company into a private company. A copy of this resolution was sent to the Registrar of Joint Stock Companies, but the Registrar has declined to file it. He seems to suggest that Section 154, Companies Act, prevents the conversion of a public company into a private one by means of amendments in the articles of association. He further points out that the learned company Judge has held that such conversion can never be effected except by winding up the public company and reconstituting it as a private company. It cannot be contended that the learned company Judge was wrong in refusing to confirm the amendments contained in the original application to this Court. Certain amendments in the memorandum were proposed which he held were not within Section 12(2), Companies Act. In my view, however, the learned Judge was wrong in holding that a public company could not be converted into a private company except by winding up and reconstitution. It is, in my judgment, now well established that such a conversion can take place if suitable amendments are made to the articles of association, and it is to be observed that amendments to the articles of association do not require the confirmation of this Court.

The Registrar of Joint Stock Companies appears to think that Section 154, Companies Act, prevents the conversion of a public company into a private company by mere alterations in the articles of association; but, in my judgment, that view is not well founded. Section 154 deals with the conversion of a private company into a public company, and the Section is based upon the assumption that such a conversion can be made by merely altering the articles. The purpose of the Section is to ensure, that when a company has been converted from a private company to a public company certain information must be sent to the Registrar of Joint Stock Companies, and if such is not done certain penalties are provided. There, is nothing in Section 154 from which we can infer that a public company cannot be converted into a private company by alteration of the articles. There was no need for a specific Section to deal with such a conversion, because the information which Section 154 requires to be sent to the Registrar need not be sent where the conversion is from a public company into a private one.

In short, where such a conversion takes place, there is no need for a Section corresponding to Section 154. It seems clear that for many years in England the view has been held that a public company may be converted into a private company by suitable alteration in the articles and that view is clearly expressed by the learned Editor of the recent edition of Halsbury''s Laws of England: see Vol. 5, p. 133. In no case has the Registrar of Joint Stock Companies in England declined to recognize such a change, and it may now safely be inferred that a conversion such as the one proposed can be made merely by altering the articles provided that suitable alterations are made.

As I have already stated, by a special resolution alterations in the articles have been made with the end in view of altering the nature of this company, and, in my judgment, there is nothing in the Companies Act which prohibits the Registrar from refusing to file such amendments. On the contrary, it appears to me that by reason of Section 82, Companies Act, he is bound to file them. The company does not now press for the confirmation of the original amendments made, and that being so, the appeal must be dismissed. It is clear that the point which has been urged before us as to whether a conversion of a public company into a private one can be made by suitable alterations in the memorandum was not argued fully before the learned Judge. Otherwise, I feel he would not have made the observation which he did that winding up and reconstitution was necessary.

Brough, J.

I agree.