Private limited company and limited company

Ziaur Rahman (Querist) 27 July 2009 This query is : Resolved
What is the basic difference between a private limited company and a limited company? How a pvt ltd co is formed and how a limited co is formed?

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A V Vishal (Expert) 27 July 2009
What is a Private Limited Company?
A Private Limited Company is limited by shares with a maximum of 50 shareholders and no invitation can be made to the public for the subscription of either its shares or debentures, with restriction to make or accept deposits from Public, and transfer of shares through public offer.
In a Private Limited Company, the shareholders liability is limited to the extent of the unpaid amount of the face value of the shares and the premium thereon in respect of shares held by a shareholder.

What is a Public Limited Company?
A Public Limited Company is limited by shares with no restriction on the maximum number of shareholders, transfer of shares and acceptance of public deposits. The shareholders liability is limited to the extent of the unpaid amount of the face value of shares and the premium thereon in respect to shares held by a shareholder. The minimum number of shareholders required for a Public Limited Company is seven.

What is the minimum paid-up capital of a Private Limited Company?
At the time of incorporation of a Private Limited Company, the minimum paid up capital has to be Rupees 1,00,000 in Indian currency. There is no sealing on maximum limit of authorized capital or paid up capital. Any time during the lifetime of the company the capital can be raised by the payment of additional stamp duty and registration fee.

What is the difference between authorized capital and paid up capital?
Authorized capital is share capital of such kind where the capital limit is authorized by the Registrar of Companies up to which the shares can be issued to the members or public, whereas paid up share capital is share capital of such kind where the paid portion of the capital is subscribed by the shareholders.

What is the procedure in obtaining a name approval for the proposed Company?
For obtaining a name approval of the proposed company, first an application in Form No.1A needs to be filed, properly filled, with the Registrar of Companies (ROC) online through Digital Signature of any one of the proposed director. Details to be furnished are as given below:

Alternative names of the proposed company in priority sequence. The names can be the coined name from the objects of the proposed company or even the name of the directors, and of such kind. Whatever be the case, it should be indicative of the main object of the proposed company. The name justification is required to be specified along with the application.

Names and addresses of the promoters are to be mentioned. (for Public Company it is minimum 7 and for Private Company it is 2).

Authorized Capital and main objects of the proposed company are to be mentioned.

Names of other group companies in which directors hold directorship has also to be given.

The ROC scrutinizes the application after receiving and within 3 to 4 days sends the approval or objections to the applicant through e-mail.

What is the Memorandum of Association (MOA) and the Articles of Association (AOA) of a company and what is the procedure in this regard?
After the approval of name from ROC, there is requirement to draft MOA and AOA. MOA states the main, ancillary or subsidiary and any other objects of the proposed company whereas the AOA contains the rules and procedures for the routine conduct of such proposed company, and also the authorized share capital and names of its first or permanent directors. Both the MOA and the AOA is thereafter stamped from Collector of Stamps. The stamp duty paid depends on authorized share capital.

What are the documents required to be executed for incorporation?
The under mentioned documents are required to be filed with ROC for incorporation of company:

MOA and AOA - Should be signed by the promoters in handwriting in the presence of a witness. It should state details like full name, father's name, residential address, occupation and number of shares subscribed for.

Form No. 1 - This form is a declara