The Companies Act 2006 enables companies to convert their legal status from a UK public limited company (PLC) to a UK private limited company (LTD) in one of three ways-
Passing the special resolution from the shareholders
Acquiring a court order to reduce the firm's money
Following cancellation or re-denomination of shares resulting in a declining of issued share capital under the minimum for a PLC.
Altogether these processes are known as re-registration. In all circumstances, the normal value of the share capital of your company must be below the minimum for a PLC.
Re-registering a public limited company as a private limited company can provide several administrative and financial benefits if PLC status no longer provides your business with any significant benefit. It is more time-consuming and costly to keep a PLC than a private company.
Financial accounts should be checked annually, and the cost of recruiting auditors and accountants can be huge. As a private limited company, you can apply for an audit exception and your administrative criteria will be much less. Hence this results in saving your valuable time and money.
The shareholders special resolution
The Companies Act 2006, sections 97-101 enable a public limited company to re-register as a private limited company by passing a special resolution of the shareholder at a general meeting or in writing. That kind of resolution requires a 75% majority vote in favour of the change.
A company director is then expected to fill out an application on Form RR02-Application for re-registration as a private limited company by a public company and to send a copy of the Special Resolution to Companies House, a printed copy of the Articles of Association as proposed to be revised or new articles to be introduced in place of existing articles, and a processing fee of 20 is expected.
Form RR02 should contain the below information:
Full name of PLC
Company registration number
Compliance Statement the signature of a company director, secretary or other authorised people
Proposed name of a re-registered private company (including Ltd or Limited)
Company will be re-registered accordingly and a certificate of incorporation will be issued once the Companies House is satisfied that the PLC is entitled to be re-registered as a private company limited by shares or guarantee.
The certificate will state that it is issued on re-registration, the new name of the company and the date on which the certificate is issued.
Objection to re-registration
After the resolution has been passed, shareholders may object to the re-registration of a PLC. To do this, within 28 days of the resolution being passed, an application to revoke the resolution must be sent to the court.
The application should be formed by members who collectively hold at least 5% of the nominal issued share capital of the company or a minimum of 50 shareholders. Members who voted in favour of the resolution are not permitted to object to the re-registration application only those members who were not in favour may voice their objections to the court.
Form RR03 provides notice of an application to court: cancellation of resolution for re-registration must be used to object to re-registration.
Court order to minimize capital
The Companies Act 2006, section 651 offers that, following a court order to minimize share capital of a public company, the company can apply to be re-registered as a private company without the requirement of passing a special resolution.
With the court order provided, you are required to fill the Form RR08 and submit to Companies House. Following are the details that need to be included on this form.
Name of PLC
Company registration number of PLC
Signature of the director
Proposed name for the private limited company upon re-registration (including Ltd or Limited)
Following a reduction of capital because of the cancellation of shares
If your public limited company's issued share capital falls under 50,000 or the Euro equivalent as a result of a cancellation of shares, you must re-register your PLC as a private company. The company directors must pass a resolution and fill Form RR09 - Re-register a public company as a private company following the cancellation of shares with Companies House, along with a copy of a resolution of the director and a printed copy of the articles of association, as amended. Similar provisions are in place in instances where the share capital falls below the £50,000 (or Euro equivalent) threshold as a result of the redenomination of shares.