What are the advantages of converting to a private limited company?
Converting to a private limited company from a public limited company will not only allow Tata Sons Ltd to enforce restrictions on its shares changing hands, but also make it easier to meet compliance and regulatory provisions and exercise greater control. For instance, a private company does not need to hold a meeting of shareholders and pass a special resolution to do related-party transactions.
Tata Sons, which has proposed the conversion in a notice to shareholders, is not a rarity in seeking to become a private limited company. Ministry of corporate affairs data shows a sharp increase in the number of companies that rushed to become private entities around the time the Companies Act of 2013 became law.