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Unformatted text preview: Learning Objectives At the end of this chapter, you will be able to Â· Identify the different types of company Introduction Today we will learn about the important types of company. There are various basis to classify companies. On the basis of the number of the members, companies can be divided in two: Â· A Private Company Â· A Public Company Public Company means a company which not a private company. Private Company means a company which by its articles of association: - a. Restricts the right of members to transfer its shares b. Limits the number of its members to fifty. In determining this number of 50, employee-members and ex-employee members are not to be considered. c . Prohibits an invitation to the public to subscribe to any shares in or the debentures of the company. If a private company contravenes any of the aforesaid three provisions, it ceases to be private company and loses all the exemptions and privileges, which a private company is entitled. Following are some of the privileges and exemptions of a private limited company:-1. Minimum number is members is 2 (7 in case of public companies) 2.Prohibition of allotment of the shares or debentures in certain cases unless statement in lieu of prospectus has been delivered to the Registrar of Companies does not apply. 3.Restriction contained in Section 81 related to the rights issues of share capital does not apply. A special resolution to issue shares to non-members is not required in case of a private company. 4.Restriction contained in Section 149 on commencement of business by a company does not apply. A private company does not need a separate certificate of commencement of business. 5.Provisions of Section 165 relating to statutory meeting and submission of statutory report do not apply. 6.One (if 7 or less members are present) or two members (if more than 7 members are present) present in person at a meeting of the company can demand a poll. 7.In case of a private company which not a subsidiary of a public limited company or in the case of a private company of which the entire paid up share capital is held by the one or more body corporate incorporated outside India, no person other than the member of the company concerned shall be entitled to inspect or obtain the copies of profit and loss account of that company....
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- Spring '11
- Business, Corporation, Types of companies, private company