{"id":6031,"date":"2022-10-11T07:56:21","date_gmt":"2022-10-11T07:56:21","guid":{"rendered":"https:\/\/commerceiets.com\/?p=6031"},"modified":"2022-10-11T07:56:21","modified_gmt":"2022-10-11T07:56:21","slug":"kinds-of-companies-in-company-law","status":"publish","type":"post","link":"https:\/\/commerceiets.com\/kinds-of-companies-in-company-law\/","title":{"rendered":"KINDS OF COMPANIES IN COMPANY LAW"},"content":{"rendered":"\n
ANSWER:<\/strong><\/p>\n\n\n\n A private company is a firm held under private ownership. Private companies may issue stock and have shareholders, but their shares do not trade on public exchanges and are not issued through an initial public offering (IPO).<\/p>\n\n\n\n Section 2(68) of the Companies (Amendment) Act, 2015 defines a Private Company as a company which has a minimum paid up capital as may be prescribed, and by its articles:<\/p>\n\n\n\n (i) restricts the rights of its members to transfer of share, (if it has any);<\/p>\n\n\n\n (ii) except in case of one person company, limit the number of its members to two hundred (200), which does not include.<\/p>\n\n\n\n Where two or more persons hold one or more shares in a company jointly. They for the purposes of this clause be treated as a single member.<\/p>\n\n\n\n (iii) prohibits any invitation to the public to subscribe for any securities of the company.<\/p>\n\n\n\n The provisions of the Companies Act are equally applicable to private and public companies; but in some cases, the Act provides some privileges and exemptions to private companies. These privileges and exemptions available to a private company are in fact nothing but its advantages over a public company. They are as follows:<\/p>\n\n\n\n PRIVILEGES REGARDING FORMATION OR INCORPORATION: <\/strong>These are as under:<\/p>\n\n\n\n PRIVILEGES REGARDING ISSUE OF SHARES:<\/strong><\/p>\n\n\n\n PRIVILEGES REGARDING MEETINGS:<\/strong><\/p>\n\n\n\n PRIVILEGES REGARDING DIRECTORS:<\/strong><\/p>\n\n\n\n OTHER PRIVILEGES:<\/strong><\/p>\n\n\n\n CONCLUSION<\/strong><\/p>\n\n\n\n Although the private companies enjoy the special privileges over and above public companies. But if any private company violates the section 2 (68) of companies act 2013 which is relating to the articles of association, the company may lose its privileges.<\/p>\n\n\n\n\n\n\n\n KINDS OF COMPANIES IN COMPANY LAW : Statutory companies, chartered companies, registered company, foreign companies, investment companies, one person company, public company, private company etc.<\/p>\n\n\n\n Answer:<\/strong><\/p>\n\n\n\n According to the Companies Act of 2013, a company that is listed on a stock exchange and is able to offer its securities to the general public is referred to as a public company. The company must launch an IPO in order to become publicly traded. A company that is publicly traded allows its shareholders to easily sell shares on a stock exchange. A publicly-traded company must make its annual report accessible to all stakeholders. In order to grow, a public company must issue more shares to the general public.<\/p>\n\n\n\n According to Section 2(71) of the Companies (Amendment) Act, 2015 public company’ means:<\/p>\n\n\n\n (i) A company which is not a private company.<\/p>\n\n\n\n (ii) has a minimum paid up capital as may be prescribed.<\/p>\n\n\n\n A company which is a subsidiary of a company, not being a private company, shall be deemed to be a Public Company for the purposes of this Act even where such subsidiary continues to be a private company in its articles.<\/p>\n\n\n\n Thus, a public company may be said to be an association consisting of not a Private Company within the meaning of the Act. The shares and debentures of a Public Company may be listed on a Stock Exchange and are offered to public for sale.<\/p>\n\n\n\n The Conversion of Public Company into Private Company is mentioned in the Companies Act, 2013, and Incorporation of Companies Rules, 2014. The Private Company has less compliance as compared to Public Company to be followed under the Companies Act, 2013. The need for less compliance leads to increase Conversion of Public Company into Private Company. Earlier, the National Company Law Tribunal (NCLT) has the power for the Conversion of Public Company into Private Company now the power has moved to Regional Director.<\/p>\n\n\n\n The detailed procedure is as follows:<\/p>\n\n\n\n 1. Board resolution for approval for conversion and alteration of memorandum & articles of association with restrictions applicable to a private company u\/s 2(68) and appointment of Attorney.<\/p>\n\n\n\n 2. Special resolution for approval for conversion, alteration of memorandum & articles of association and change of name to add word \u201cPrivate\u201d in the name.<\/p>\n\n\n\n 3. eForm MGT-14 for filing the resolution within 30 days of passing of resolution with Registrar alongwith:<\/p>\n\n\n\n (a) Special resolution along with explanatory statement<\/p>\n\n\n\n (b) Consent to shorter notice (if applicable)<\/p>\n\n\n\n (c) Altered memorandum & articles of association<\/p>\n\n\n\n 4. Company shall at least before 21 days of filing of the application<\/p>\n\n\n\n (a) advertise the application in Form INC 25A.<\/p>\n\n\n\n (b) serve individual notice by registered post with acknowledgement due to each of the Creditors and debenture holders and<\/p>\n\n\n\n (c) serve a notice to RD, Registrar and Regulatory Body by registered post acknowledgement due, if the Company is regulated by any other law<\/p>\n\n\n\n 5. Application in e-Form No. RD-1 with Regional Director(\u201cRD\u201d) within 60 days from passing of Special Resolution with fee as provided in the Companies (Registration Offices and Fees) Rules, 2014 along with following attachments:<\/p>\n\n\n\n (a) Copy of the memorandum and articles of association<\/p>\n\n\n\n (b) Copy of minutes of General Meeting<\/p>\n\n\n\n (c) Copy of Board Resolution of Power of Attorney not earlier than 30 days to authorise to file application to RD.<\/p>\n\n\n\n (d) Declaration by a Key Managerial Personnel (\u201cKMP) pursuant to section 2(68)<\/p>\n\n\n\n (e) Declaration by a KMP that there has been no non-compliance of sections 73 to76A, 177, 178, 185, 186 and 188 of the Act<\/p>\n\n\n\n (f) Declaration by a KMP that no resolution is pending to be filed pursuant to section 179(3) and also stating that the company was never listed in any of the Regional Stock Exchanges and if was so listed, all necessary procedures were complied as laid down by Securities Exchange Board of India.<\/p>\n\n\n\n 6. Duly authenticated copy of the list of creditors and debenture holders to be kept at the Registered Office for inspection if any.<\/p>\n\n\n\n 7. In case no objection received for the advertisement or notice and application is complete then RD shall without hearing pass an approval order within 30 days of receipt of the application.<\/p>\n\n\n\n 8. In case of defective\/incomplete application, RD shall intimate the Company within 30 days from the receipt of the application where Company shall rectify the application and resubmit within 15 days of in eForm RD-GNL-5.<\/p>\n\n\n\n 9. In case of no resubmission of defects or non-satisfaction of RD, RD shall reject the application within 30 days from the date of filling application or within 30 days from the date of last re-submission made, as the case may be.<\/p>\n\n\n\n 10. Where an objection is received for conversion or RD has specific objection, then RD shall hold hearing within 30 days and direct company to file affidavit to record consensus at the hearing Receipt of order of NCLT post Hearing and approval of Fam MGT-14 by Registrar for conversion.<\/p>\n\n\n\n 11. In case no consensus is received within 60 days of filing of application, RD shall re the application within stipulated period of 60 days.<\/p>\n\n\n\n 12. A Company shall file certified copy of the order passed by the RD in Form INC-21 within 15 days of receipt of approval.<\/p>\n\n\n\n\n\n\n\n KINDS OF COMPANIES IN COMPANY LAW : Statutory companies, chartered companies, registered company, foreign companies, investment companies, one person company, public company, private company etc.<\/p>\n\n\n\n ANSWER:<\/strong><\/p>\n\n\n\n PRIVATE COMPANY: <\/strong>Section 2(68) of the Companies (Amendment) Act, 2015 defines a Private Company as a company which has a minimum paid up capital as may be prescribed, and by its articles:<\/p>\n\n\n\n (i) restricts the rights of its members to transfer of share, (if it has any);<\/p>\n\n\n\n (ii) except in case of one person company, limit the number of its members to two hundred (200), which does not include.<\/p>\n\n\n\n (a) members who are the employees and members of the company.<\/p>\n\n\n\n (b) members who, while they were employees of the company, were also it members and continue to be its members after leaving its employment.<\/p>\n\n\n\n Where two or more persons hold one or more shares in a company jointly. They for the purposes of this clause be treated as a single member.<\/p>\n\n\n\n (iii) prohibits any invitation to the public to subscribe for any securities of the company.<\/p>\n\n\n\n PUBLIC COMPANY: <\/strong>According to Section 2(71) of the Companies (Amendment) Act, 2015 public company’ means:<\/p>\n\n\n\n (i) A company which is not a private company.<\/p>\n\n\n\n (ii) has a minimum paid up capital as may be prescribed.<\/p>\n\n\n\n A company which is a subsidiary of a company, not being a private company, shall be deemed to be a Public Company for the purposes of this Act even where such subsidiary continues to be a private company in its articles.<\/p>\n\n\n\n Thus, a public company may be said to be an association consisting of not a Private Company within the meaning of the Act. The shares and debentures of a Public Company may be listed on a Stock Exchange and are offered to public for sale.<\/p>\n\n\n\n KINDS OF COMPANIES IN COMPANY LAW : Statutory companies, chartered companies, registered company, foreign companies, investment companies, one person company, public company, private company etc.<\/p>\n\n\n\n ANSWER:<\/strong><\/p>\n\n\n\n Company is an artificial person created by the law for some common purpose where the capital is divisible into parts known as shares with perpetual succession and common seal. The various types of companies are as follows:<\/p>\n\n\n\n ON THE BASIS OF FORMATION<\/strong><\/p>\n\n\n\n On the basis of formation, the companies are of following types:<\/p>\n\n\n\n CHARTERED COMPANIES:<\/strong> These are the companies which are formed by a special charter which govern the powers and nature of the company. These companies were formed in the England by the grant of the charter such as East India Company and Bank of England.<\/p>\n\n\n\n STATUTORY COMPANIES:<\/strong> The companies which are formed under a special act of parliament or legislature of state are known as Statutory Companies. The working of these companies are governed as per the Act under which these form. Example: <\/strong>Reserve Bank of India (Governed by RBI Act, 1934), Life Insurance Corporation (LIC), Unit Trust of India (UTI) etc.<\/p>\n\n\n\n REGISTERED COMPANIES: <\/strong>These are those companies which are registered under the Companies Act, 2013 or under any previous Act. These companies come into existence when they get registered under Companies Act in force and acquire the Certificate of Incorporation and Certificate of Commencement.<\/p>\n\n\n\n ON THE BASIS OF LIABILITY<\/strong><\/p>\n\n\n\n On the basis of the liability, the companies can be divided into three categories:<\/p>\n\n\n\n LIMITED BY SHARES: <\/strong>These are the companies in which the liability of members is strictly limited to the extent of the nominal value of shares held by each of them. If the member has paid the full amount of shares, he will not be liable to pay any amount further. If a member has partly paid shares, he can be forced to pay the remaining amount during the existence of the company as well as during the winding up. Such companies are further divided as Public Company, Private Company or One Person Company.<\/p>\n\n\n\n LIMITED BY GUARANTEE:<\/strong> In case of such companies, the liability of the members is limited up to the extent of the guarantee given by them in the event of winding up of the company. The liability of its members will arise only in the event of winding up of the company.<\/p>\n\n\n\n UNLIMITED COMPANY:<\/strong> Unlimited company is a company where there is no limit on the liability of its members. It means, when a company suffers loss and the company\u2019s property is not sufficient to pay off its debts, the private property of its members will be used to meet the claims of the creditors. As the risk involved in such companies is too high, these are not found in India even though permitted by the Companies Act.<\/p>\n\n\n\n ON THE BASIS OF PUBLIC INVESTMENT<\/strong><\/p>\n\n\n\n On the basis of the public investment, the companies can be Public or Private:<\/p>\n\n\n\n PUBLIC COMPANY:<\/strong> A public company is the company which can issue its shares to the public and can be formed with the minimum of 7 members. These companies are required to use the word \u2018Limited\u2019 with their names. These companies can start their business after getting the Certificate of Incorporation and Certificate of Commencement from the Registrar of the Companies.<\/p>\n\n\n\n PRIVATE COMPANY:<\/strong> A private company is a company which cannot issue its share capital to the public and can be formed with the minimum of two members. These companies are required to use the word \u2018Private Limited\u2019 with their names. These companies can start their business after getting the Certificate of Incorporation from the Registrar of the Companies.<\/p>\n\n\n\n OTHER COMPANIES<\/strong><\/p>\n\n\n\n The following are the other companies:<\/p>\n\n\n\n ONE PERSON COMPANY:<\/strong> One Person Company means a company which has only one member. The Companies Act 2013 has introduced this type of Company in India. Only a natural person who is an Indian citizen and resident of India can be the member of this company and the minimum paid up capital of this company must be \u20b91,00,000. Section 2(62) of Companies Act 2013 defines One Person Company as a company which has only one person as a member. Some features of one person company are:<\/p>\n\n\n\n SMALL COMPANY: <\/strong>Small Company is a company other than public company:<\/p>\n\n\n\n a) Whose paid-up capital is from 25 lakhs to 5 crore and turnover ranges from 5-75 crores in case of manufacturing concern.<\/p>\n\n\n\n b) Whose paid-up capital is from 10 lakhs to 2 crore and turnover ranges from 5-75 crores in case of services organization.<\/p>\n\n\n\n DORMANT COMPANY: <\/strong>Dormant Company is the company which comes into existence under the act in the force but has not started its business. These companies remain inactive for some duration and formed presently to be operative in the future. A company is dormant if it has no significant Accounting Transaction during the Accounting Period. A significant accounting transaction is one which the company should enter in its accounting records.<\/p>\n\n\n\n HOLDING COMPANY:<\/strong> A Holding Company is a corporation that owns enough voting stock in one or more other companies to exercise control over them. A corporation that exists solely for this purpose is called pure holding company.<\/p>\n\n\n\n SUBSIDIARY COMPANY: <\/strong>A subsidiary or sister company is a company that is completely or partly owned and partly or wholly controlled by another company that owns more than half of the subsidiary\u2019s stock. The subsidiary can be company, corporation or limited liability company.<\/p>\n\n\n\n MULTI-NATIONAL COMPANIES: <\/strong>The companies, enterprises or corporations that manage production or deliver services in more than one country are called Multinational companies, enterprises or corporations, as the case may be. They can also be referred as international companies or corporations.<\/p>\n\n\n\n The International Labour Organisation has defined MNC as a corporation that has management head office in one country known as home country and operates in several other countries known as host countries. Some of the globally known Indian multi-national companies are Reliance Industries, Tata Motors, Ranbaxy Pharmaceuticals, Larsen and Toubro, WIPRO, INFOSYS, IBM India etc.<\/p>\n\n\n\n FINANCE COMPANIES: <\/strong>A \u2018Finance Company\u2019 means a non-banking company, which is a financial institution, within the meaning of Section 45(1)(c) Of the reserve Bank of India Act 1934. According to this section, a financial institution is a non-banking institution which carries on any of the following activities as its business or part of its business:<\/p>\n\n\n\nPRIVATE COMPANY<\/h4>\n\n\n\n
FEATURES OF PRIVATE COMPANY<\/strong><\/h4>\n\n\n\n
SPECIAL PRIVILEGES OF PRIVATE COMPANIES UNDER COMPANIES ACT 2013<\/strong><\/h4>\n\n\n\n
QUESTION: Define a public company? State the procedure for conversion of a public company into a private company?<\/h3>\n\n\n\n
PROCEDURE FOR CONVERSION OF PUBLIC COMPANY INTO PRIVATE COMPANY<\/h4>\n\n\n\n
QUESTION: Bring out the main points of difference between private ltd. Company and public limited company?<\/h3>\n\n\n\n
DIFFERENCE BETWEEN PUBLIC COMPANY AND PRIVATE COMPANY<\/h4>\n\n\n\n
Basis of Difference<\/strong><\/td> Private Company<\/strong><\/td> Public Company<\/strong><\/td><\/tr> Number of members<\/strong><\/td> The minimum number of members is 2 and the maximum number of members excluding the present and past employees is 200.<\/td> The minimum number of members is 7 and the maximum can be as many as the number of shares of the company.<\/td><\/tr> Invitation to Public<\/strong><\/td> A private company cannot invite the public to invest in its shares. It needs to arrange the required capital from its own sources.<\/td> A public company arranges the total capital requirement from the public. To do that, it invites the public to invest in its shares and debentures.<\/td><\/tr> Allotment of shares<\/strong><\/td> A private company can allot shares immediately on the receipt of the incorporation certificate.<\/td> A public company cannot allot its shares to the public.<\/td><\/tr> Commencement of business<\/strong><\/td> A private company can commence its business immediately on the receipt of the certificate of incorporation.<\/td> A public company cannot commence its business so long as it gets an official letter of commencement to do so.<\/td><\/tr> Issue of prospectus<\/strong><\/td> A private company cannot issue a prospectus or a statement in lieu of prospectus.<\/td> It is mandatory for a public company to issue a prospectus. In the absence of a prospectus, it is necessary to issue a statement in lieu of prospectus.<\/td><\/tr> Transfer of shares<\/strong><\/td> The transfer of shares is restricted to a specified limitation.<\/td> The transfer of shares is not restricted and it is at the will of the shareholders.<\/td><\/tr> Preparation of Articles<\/strong><\/td> Preparation of articles is mandatory for a private company.<\/td> Preparation of Articles is not compulsory in a public company. In case the Articles are not registered, the provisions of Schedule 1A Table shall be applicable.<\/td><\/tr> Issue of bearer share warrant<\/strong><\/td> A private company cannot issue a bearer share warrant.<\/td> A public company may issue bearer share warrants if the shares of the company are fully paid-up.<\/td><\/tr> Number of directors<\/strong><\/td> There must be at least two directors.<\/td> There must be at least three directors.<\/td><\/tr> Qualification shares<\/strong><\/td> It is not mandatory for the directors to have qualification shares in a private company.<\/td> It is mandatory for the directors of a public company to have qualification shares.<\/td><\/tr> Increase in number of directors<\/strong><\/td> A private company can increase its number of directors without the permission of the government.<\/td> A public company cannot increase the number of its directors without the permission of the Central Government.<\/td><\/tr> Loan to directors<\/strong><\/td> It is not necessary for a private company to get prior permission of the Central Government to give loan to its directors.<\/td> Prior permission of the Central Government is necessarily required for a public company to give loan to its directors.<\/td><\/tr> Retirement of directors by Rotation<\/strong><\/td> It is not required by the law for the directors of a private company to retire by rotation.<\/td> One-third of the directors of a public company are required to retire by rotation.<\/td><\/tr> Filing of documents<\/strong><\/td> A private company need not to submit the following documents to the Registrar of the Companies: (a) list of directors; (b) consent of directors; (c) copy of any contract with the directors.<\/td> For the incorporation of a public company, it is compulsory to file these documents with the Registrar of companies.<\/td><\/tr> Share Capital<\/strong><\/td> The minimum paid up share capital should be \u20b91,00,000.<\/td> The minimum paid-up share Capital should be \u20b95,00,000.<\/td><\/tr><\/tbody><\/table><\/figure>\n\n\n\n\n\n\n\n QUESTION: What are the different kinds of companies?<\/h3>\n\n\n\n
TYPES OF COMPANIES<\/h4>\n\n\n\n