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Companies covered by the Companies Act

a) Private Company - Sec 3 (1) (iii)
b) Public Company - Sec 3(1)(iv)

These companies may be:

i) Companies with liability limited by shares.

ii) Companies with liability limited by guarantee.

iii) Companies with unlimited liabilities (Unlimited

Companies).
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 COMPANIES


  
 

  


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 FEATURES OF PRIVATE COMPANIES

A PRIVATE COMPANY
Means a Company which has a minimum paid-up
Capital of Rs. 1.00 lac
AND

1. Number of 2. Transfer of 3. Invitation 4. Invitation or

Members Shares for Public Acceptance of
Subscription Deposits

Minimum2 Restricted No public Offer Not allowed from

Maximum 50 for Shares or persons other than
its members, directors
Debentures or their relatives

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ILLEGAL ASSOCIATION [SEC 11]
An association or partnership is an illegal association if all
the following conditions are satisfied :
(a)The number of persons carrying on business exceeds
20 (10 persons in case of banking business).
(b) It is formed for the purpose of earning profits.

(c)It is not registered under the Companies Act or formed

under any other Indian law (e.g. Cooperative Societies Act
,Trust Act).
(d)It is not a Joint Hindu Family (i.e., an HUF is not an
illegal association even if he number of members exceed
20 or 10, as the case may be).
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ILLEGAL ASSOCIATION [SEC 11]
EXCEPTIONS
[ Associations µnot for profit-making¶
Joint Hindu Family

[ Effects of an illegal association ±

Members personally liable and punishable with fine upto
Rs. 10,000.

An illegal association is liable to be taxed.

( KS Chattiar vs ITO 1957, ITR 457)

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Conversion of private company into a Public
company
1. Conversion by default [Sec. 43] i.e. Exceeds 50, it
permits free transfer of shares, invites public o
subscribe, issue debentures, accepts deposits from
public,
2. Conversion by operation of law
3. Conversion by choice [Sec. 44]

Conversion of a public company into a Private

company: by passing special resolution and
incorporating 4 restrictions imposed on pvt co in its
AoA.

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