Procter & Gamble (P&G) has moved the Registrar of Companies (RoC), Mumbai, to convert Procter & Gamble Distribution Company, a group company, from a public company to a private limited company.
This implies that P&G will have the freedom to incorporate restrictive clauses in its articles of association, once it gets the clearance from the registrar.
Last month, P&G recently received the RoC clearance to convert P&G Home Products (P&GHP), a wholly owned subsidiary, from public to private company.
Procter & Gamble Distribution Company, formerly P&G-Godrej, is a closely held company with 51 per cent held by Procter & Gamble of the United States.
The company passed a special resolution to amend Article 2 of its articles of association at an extraordinary general meeting on April 24.
This will give Procter & Gamble Distribution the powers to refuse share transfers and limit the number of shareholders to 50 as stipulated in section 3 1 (iii) of the Companies Act.
The move is aimed at exploiting certain advantages bestowed to private companies under the Companies Act, said top P&G sources.
However, even after the approval, Procter & Gamble Distribution and P&G Home Products would be 'deemed' public companies as per Section 43 (a) of the Companies Act, because their average turnover is more than Rs 10 crore. P&GHP's turnover alone estimated at over Rs 450 crore.
Procter & Gamble India will thus remain the only public company with 35 per cent of its share holding with investors, while the rest 65 per cent is held by P&G, US.
The move to convert the two group companies into private companies could be a prelude to the shake-up within the
Procter & Gamble group, said sources.
In fact, after the break-up with Godrej, Procter & Gamble has been considering various options for Procter & Gamble Distribution Company.
This includes the winding up of the company and merger with P&GHP. Company sources said it has not been decided which option to take adding a decision would be taken within a month.
