(Querist) 20 June 2008
This query is : Resolved
what are the exemption for forming private limited company
(Expert) 20 June 2008
Private Company means a company which by its articles of association :-
Restricts the right of members to transfer its shares
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.
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:-
Mimimum number is members is 2 (7 in case of public companies)
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.
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.
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.
Provisions of Section 165 relating to statutory meeting and submission of statutory report does not apply.
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.
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 corporates incorporated outside India, no person other than the member of the company concerned shall be entiled to inspect or obtain the copies of profit and loss account of that company.
Minimum number of directors is only two. (3 in case of a public company)
The Company Law Board on being satisfied that the infringement of the aforesaid 3 conditions was accidental or due to inadvertence or that on other grounds, it just an equitable to grant relief, may grant relief to the company from the consequences of such infringement. The infringement of the aforesaid 3 conditions does not automatically convert a private company into a public company. It continues to remain a private company; it merely ceases to be entitled to the privileges and exemptions available to a private company.
anantha krishna n.v. Advocate
(Expert) 11 July 2008
what do you mean by exemptions?
Yeah I can quote one:
a private limited company can start off its business after receipt of certificate of incorporation withoutwaiting for certificate of commencement whereas a public limited company needs to obtain certificate of commencement to actually commence.