# Section 18 - Conversion of Companies Already Registered

## 1. General Power of Conversion

A company of any class registered under this Act may convert itself into a company of other class by:

Alteration of its MoA and AoA
As per provisions of this Chapter

### Possible Conversions Include:

Private → Public
Public → Private
Limited → Unlimited
Unlimited → Limited
Company limited by guarantee → Company limited by shares
And other combinations

## 2. Application to RoC for Fresh CoI

On such conversion, the RoC shall:

### Step 1: Process the application

On application by the company, RoC satisfies himself that provisions of this Chapter are complied with.

### Step 2: Close former registration

Close the former registration of the company.

### Step 3: Issue Fresh CoI

After registering the required documents, issue a Certificate of Incorporation (CoI) as if it were the first registration.

## 3. Preservation of Liabilities and Contracts

Critical Principle: The registration of a company under this section shall NOT affect:

Any debts
Liabilities
Obligations
Contracts

... incurred or entered into by/on behalf of the company before conversion.

Such debts/liabilities/contracts may be enforced in the same manner as if registration (conversion) had not been done.

### Why This Matters

This provision protects creditors and contracting parties. A company cannot escape its pre-conversion obligations by changing its class. The new entity is the same legal entity, just with a different classification.

## 4. Conversion vs. Fresh Incorporation

Feature	Conversion u/s 18	Fresh Incorporation
Legal Identity	Same legal entity	New legal entity
CIN	New CIN issued	New CIN
Liabilities	Continue	None
Contracts	Survive	Need fresh contracts
Date of incorporation in CoI	New date	New date

## 5. Practical Considerations

Conversion does not break continuity
All ongoing litigation continues
All bank accounts, licenses, registrations continue (subject to intimation)
PAN, TAN remain the same
Tax assessments continue against the converted entity

Worked example

### Example 1

Example - Public to Private Conversion: 'BigCo Ltd' (public co.) converts to 'BigCo Pvt Ltd'. After conversion, RoC issues fresh CoI. BigCo had taken a loan of Rs. 5 cr from Bank ABC before conversion. The bank can still recover this Rs. 5 cr from 'BigCo Pvt Ltd' - the obligation continues post-conversion.

### Example 2

Example - Limited to Unlimited: 'Risky Ltd' converts to 'Risky' (unlimited co.). Pending lawsuits against Risky Ltd will be enforced against Risky (unlimited). Now, member liability may extend further as it's an unlimited company.

### Example 3

Example - Contract Continuity: 'Service Pvt Ltd' had a 5-year IT support contract with Client X. The company converts to 'Service Ltd' (public). Client X cannot terminate the contract citing conversion. The contract continues with 'Service Ltd' on the same terms.

### Example 4

Example - Tax Liabilities: Income tax demand of Rs. 50 lakhs raised against 'Tax Pvt Ltd' for AY 2024-25. They convert to 'Tax Ltd' (public). The demand continues against 'Tax Ltd' - they cannot escape liability by conversion.

### Example 5

Example - Fresh CoI Status: 'OldCo Pvt Ltd' incorporated in 2010 converts to public co. on 1st June 2026. New CoI shows the company name as 'OldCo Ltd' with a fresh registration certificate, BUT for all legal purposes, the company is treated as existing since 2010.

⚠️ Common exam mistakes

Believing conversion creates a new legal entity - it's the same entity with a different class.
Thinking pre-conversion liabilities don't survive conversion - they continue against the converted company.
Confusing conversion with merger/amalgamation - they are different processes.
Assuming all licenses and approvals automatically transfer - some may need re-application or intimation.
Forgetting that converting from public to private requires CG approval (under Section 14), making this not a fully discretionary right.
Not understanding that creditors and contract parties have continued rights against the converted company.

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

Section 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.

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