# Conversion of Companies Already Registered (Section 18)

## What is Conversion?

A company already registered under the Act can be converted into another class of company (e.g., private to public, OPC to private, public to private).

## Procedure for Conversion

### Step 1 — Alter MOA and AOA

The company must alter its MOA and AOA in compliance with the Act's provisions for that new class.

### Step 2 — Application to ROC

The company files an application with the ROC for conversion
The ROC verifies compliance with registration requirements of the new class
ROC closes the former registration of the company

### Step 3 — Issue of Fresh Certificate of Incorporation

After registering the necessary documents, the ROC issues a fresh certificate of incorporation for the newly converted company — similar to the original registration process.

## Critical Protection: Continuity of Liabilities (Sec 18(3))

> Conversion does NOT affect:

> - Any debts

> - Any liabilities

> - Any obligations

> - Any contracts entered into before conversion

These can be enforced against the converted company as if conversion had never happened. The corporate entity continues — only its class changes.

## Key Insight

Conversion is a change of legal form, not a change of legal entity. The company's identity, PAN, history, and liabilities all continue.

Worked example

### Example 1

Example 1: ABC Pvt Ltd, having outstanding loans of ₹50 lakh, converts into a public company ABC Ltd. Can the creditors still recover the loan?

Answer: Yes. Under Section 18(3), conversion does not affect pre-conversion debts and liabilities. Creditors can enforce the loan against ABC Ltd just as they could against ABC Pvt Ltd. The corporate identity is continuous.

### Example 2

Example 2: A private company has a 5-year supply contract with a vendor. After conversion to public, does the contract continue?

Answer: Yes. Pre-conversion contracts continue and are enforceable. The converted company assumes all contractual obligations entered into by the original entity.

⚠️ Common exam mistakes

Assuming conversion creates a new company — it does NOT; the entity continues.
Believing that pre-conversion debts are extinguished after conversion — they are fully enforceable.
Confusing this with amalgamation or merger — those are different concepts.
Skipping the step of altering MOA/AOA before approaching ROC for conversion.

Bare-Act text Section 18 · Companies Act, 2013 · click to expand

18. (1) A company of any class registered under this Act may convert itself as a company of other class under this Act by alteration of memorandum and articles of the company in accordance with the provisions of this Chapter... (3) The registration of a company under this section shall not affect any debts, liabilities, obligations or contracts incurred or entered into, by or on behalf of the company before conversion and such debts, liabilities, obligations and contracts may be enforced in the manner as if such registration had not been done.

Now that you've read this — what's next?

Move from understanding → mastery in 3 clicks. Each option below picks up from this lesson's topic.

🔥 Drill 5 Qs on this → ✍️ Adaptive practice →