What will be the consequence in case if a private company incorporated under the provisions of Indian companies Act, 1956 defaults in complying with conditions constituting a private Company in terms of section 3(i)(iii) of the companies Act, 1956


-1

Definition of a private company is given under section 3(i)(iii) as follows:

Private company means a company which has a minimum paid up capital of one lakh rupees and which by its articles (a) Restricts the right to transfer its shares

(a) Limits the number of its members to 50, excluding Employee member and ex-employees.

(b) Prohibits issue of its shares or debenture to the public.

(c) prohibits acceptance of deposits from persons other than its members, directors or their relatives.

According to section 43 of the companies Act, 1956 if a private company makes default in complying with any of the above mentioned conditions, the company shall become a private company, provided that the Central Government may on the application of the company, on such consequences as aforesaid.

If a private company is converted into a public company, it will have to make the following consequential changes:

  1. Change name clause of memorandum of association by deleting the word private from its name.
  2. Increase authorized capital and paid up capital up to Rs. 5 Lakhs, if it is less than this amount
  3. Increase its directors to three
  4. Increase its numbers of members, to seven.
  5. Delete those clauses from articles which are not suitable for a public company.
  6. Give notice to ROC.

Like it? Share with your friends!

-1
BMS Team

We, at BMS.co.in, believe in sharing knowledge and giving quality information to our BMS students. We are here to provide and update you with every details required by you BMSites! If you want to join us, please mail to [email protected].

6 Comments


Warning: Undefined array key "html5" in /home/bmsnewco/public_html/wp-content/plugins/facebook-comments-plugin/class-frontend.php on line 140

Facebook comments:

This Website Is For Sale. Email us an offer we cannot refuse on [email protected] :)

X
Choose A Format
Personality quiz
Series of questions that intends to reveal something about the personality
Trivia quiz
Series of questions with right and wrong answers that intends to check knowledge
Poll
Voting to make decisions or determine opinions
Story
Formatted Text with Embeds and Visuals
List
The Classic Internet Listicles
Countdown
The Classic Internet Countdowns
Open List
Submit your own item and vote up for the best submission
Ranked List
Upvote or downvote to decide the best list item
Meme
Upload your own images to make custom memes
Video
Youtube and Vimeo Embeds
Audio
Soundcloud or Mixcloud Embeds
Image
Photo or GIF
Gif
GIF format