Rules 37 and 39 explained: this guide covers what it means, who it applies to, the step-by-step process, documents required, fees, due dates and penalties in India — so you can stay compliant with confidence and avoid costly mistakes.
Rule 37 covers the conversion of an unlimited liability company, with or without share capital, into a company limited by shares or by guarantee. Rule 39 covers the conversion of a company limited by guarantee into a company limited by shares. Both run through Form INC-27 after a special resolution, with notices, declarations and a decision by the Registrar within thirty days of a complete application.
This article is as amended up to G.S.R. 579(E) dated 26 August 2025 (rule text per the MCA e-book to G.S.R. 411(E) of 16 July 2024; later notifications substitute forms only). Later amendments should be checked. For advice on a conversion, see our legal consultation service.
Unlimited to limited (rule 37): special resolution, notice in Form INC-27A within seven days, objections within twenty-one days, application in Form INC-27 within forty-five days with a declaration of solvency, auditor's certificate and creditor lists. The Registrar decides within thirty days. Guarantee to shares (rule 39): special resolution, MGT-14 and INC-27 within thirty days, with paid-up capital equal to the guarantee amount.
Rule 37: unlimited liability company into a limited company
Rule 37(1) to (3): resolution, notice and application
Without prejudice to any other provision of the Companies Act, an unlimited liability company, with or without share capital, converting into a limited liability company by shares or guarantee shall pass a special resolution in a general meeting and then file an application in Form No. INC-27 in the manner in sub-rules (2) and (3).
Notice (rule 37(2)). Within seven days from the date of passing the special resolution, the company publishes a notice in Form INC-27A in two newspapers (one English, one vernacular) in the district of the registered office and places it on its website, if any. The notice indicates the proposal and seeks objections from persons interested. A copy of the notice is dispatched to creditors and debenture holders (as on the date of the notice of the general meeting) by registered post, speed post or courier with proof of dispatch. The notice states that objections may be intimated to the Registrar and the company within twenty-one days of publication, indicating nature of interest and grounds of opposition.
Application (rule 37(3)). Within forty-five days of passing the special resolution, the company files the application, with the fee under the Companies (Registration offices and Fees) Rules, 2014, attaching:
| Clause | Document or declaration |
|---|---|
| (a) | Notice of the general meeting with explanatory statement |
| (b) | Copy of the resolution passed |
| (c) | Copy of the newspaper publication |
| (d) | Altered e-Memorandum and e-Articles, certified by one authorised director or the Company Secretary, if any |
| (e) | Declaration signed by not less than two directors, including the Managing Director if any, that the conversion shall not affect any debts, liabilities, obligations or contracts incurred before conversion (except that the members' liability becomes limited) |
| (f) | Complete list of creditors and debenture holders to whom individual notices were sent, with names, addresses and amounts, and a director's declaration that notice has been dispatched to all with proof of dispatch |
| (g) | Declaration by not less than two directors, one being the Managing Director where there is one, after full enquiry, that the list of creditors is correct and contingent debts are properly estimated |
| (h) | Declaration of solvency by at least two directors, one the Managing Director where there is one, that the Board made a full inquiry and formed an opinion that the company can meet its liabilities and will not be rendered insolvent within one year from the date of the declaration, passed in a duly convened meeting or by circulation |
| (i) | Auditors' certificate that the company is solvent and a going concern as on the date of the Board resolution certifying solvency |
| (j) | No Objection Certificate from a sectoral regulator, if applicable |
| (k) | No Objection Certificate from all secured creditors, if any |
The e-book text of sub-rule (3)(d), "altered e-Memorandum of Association as well as e-Articles", was substituted by the Amendment Rules, 2023 of 19 January 2023 (and the lead-in words "documents and declarations").
Rule 37(4) to (9): declaration, decision, certificate, conditions and bar
- (4) A declaration signed by not less than two directors, including the Managing Director where there is one, that no complaints are pending against the company from members or investors and no inquiry, inspection or investigation is pending against the company or its directors or officers.
- (5) The Registrar, after considering the application and the objections received by the Registrar, and after ensuring that the company has satisfactorily addressed the objections received by the company, decides whether the approval should be granted.
- (6) The certificate of incorporation consequent to conversion is in Form INC-11A, issued upon approval.
- (7) Conditions after conversion: the company shall not change its name for one year from the date of conversion; and shall not declare or distribute any dividend without satisfying past debts, liabilities, obligations or contracts incurred before conversion (the Explanation excludes secured debts due to banks and financial institutions from "past debts" for this clause).
- (8) Not eligible if: its net worth is negative; an application is pending under the Companies Act, 1956 or 2013 for striking off its name; it is in default of annual returns or financial statements under either Act; a winding-up petition is pending; calls in arrears from directors have not been received for not less than six months from the due date; or an inquiry, inspection or investigation is pending.
- (9) The Registrar decides within thirty days from receipt of the application complete in all respects.
The 1956 Act is quoted as printed; check the current law. For the Act's provisions on conversion, read our guides to sections 17 and 18 and section 65 on unlimited to limited.
Rule 39: guarantee company into a company limited by shares
| Sub-rule | Requirement |
|---|---|
| 39(1) | A company other than a company registered under section 25 of the Companies Act, 1956 or section 8 of the Companies Act, 2013 may convert itself into a company limited by shares |
| 39(2) | The company seeking conversion shall have a share capital equivalent to the guarantee amount |
| 39(3) | A special resolution of members authorising conversion, omitting the guarantee clause in the memorandum and altering the articles to those applicable to a company limited by shares |
| 39(4) | A copy of the special resolution filed with the Registrar in Form MGT-14 within thirty days of passing, with the fee under the Fees Rules |
| 39(5) | An application in Form INC-27 within thirty days of the special resolution, with the e-Memorandum, altered e-Articles and a list of members with the number of shares held aggregating to a minimum paid-up capital equivalent to the guarantee amount |
| 39(6) | The Registrar decides within thirty days of receipt of the application complete in all respects; on approval of INC-27, a certificate of incorporation in Form INC-11B is issued |
Rule 39 was inserted with effect from 1 November 2016 and sub-rule (5) was amended in 2023. The 1956 Act reference is quoted as printed; check the current law.
Example: Meridian Heritage Society Limited, a company limited by guarantee (not under section 8), has a stated guarantee amount from its members. It passes a special resolution to omit the guarantee clause and adopt articles for a company limited by shares, files MGT-14 within thirty days, and files INC-27 with a list of members and shares adding up to a paid-up capital equal to the guarantee amount. The Registrar decides within thirty days of a complete application and issues INC-11B on approval.
The two routes compared
| Point | Rule 37 | Rule 39 |
|---|---|---|
| From | Unlimited liability company | Company limited by guarantee |
| To | Limited by shares or guarantee | Limited by shares |
| Newspaper notice | INC-27A, within seven days of the resolution | None printed |
| Objections | Twenty-one days from publication | None printed |
| Application | INC-27 within forty-five days | INC-27 within thirty days |
| Solvency | Declaration of solvency and auditors' certificate | None printed |
| Certificate | INC-11A | INC-11B |
| Decision period | Thirty days | Thirty days |
For an OPC or private-public conversion, see our article on rules 6, 7 and 7A; for section 8 companies, our article on rules 21 to 23.
Need legal advice on a conversion?
A conversion has short periods, many declarations and a Registrar's decision at the end. TaxClue can review eligibility, prepare the resolution and papers and plan the filing sequence; see our legal consultation page.
Key takeaways
- Rule 37: special resolution, INC-27A notice within seven days, INC-27 within forty-five days, decision within thirty days, certificate in INC-11A.
- Declarations include solvency (no insolvency within one year), a creditor list and an auditors' certificate.
- No name change for one year after conversion; no dividend without satisfying past debts.
- Rule 37(8) lists six bars to eligibility.
- Rule 39: guarantee to shares by special resolution, MGT-14 and INC-27 within thirty days, share capital equivalent to the guarantee amount, certificate in INC-11B.
Read next
- Rules 6, 7 and 7A: converting an OPC and back
- Rules 21 to 23: converting a section 8 company
- Section 65 of the Companies Act, 2013: unlimited to limited
- How to file Form INC-27 for conversion of a company
Disclaimer: Based on the Companies Act, 2013 rules named above as consolidated in the MCA e-book (consulted on 3 October 2026), with the later notifications the article names. Later amendments, fees, forms and the Companies Act, 2013 provisions referred to should be checked. This article is general information, not legal advice; check the official text before acting.