When a company is registered and a Certificate of Incorporation is issued by the Registrar, it shall have the following effects :
The company shall become s Separate Legal Entity from the date mentioned on the Certificate of Incorporation, which is considered as date of birth of the company.
The Company acquires Perpetual Succession. The members may come, members may go, but it goes for ever.
The company becomes the owner of its property and the Promoters of Shareholders have the right to share in the profits of the company.
The company can sue and can be sued in its own name.
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Thursday, October 21, 2010
Distinction Between A Public Company And a Private Company
1. Minimum Paid-up Capital : A company to be Incorporated as a Private Company must have a minimum paid-up capital of Rs. 1,00,000, whereas a Public Company must have a minimum paid-up capital of Rs. 5,00,000.
2. Minimum number of members : Minimum number of members required to form a private company is 2, whereas a Public Company requires atleast 7 members.
3. Maximum number of members : Maximum number of members in a Private Company is restricted to 50, there is no restriction of maximum number of members in a Public Company.
4. Transerferability of shares : There is complete restriction on the transferability of the shares of a Private Company through its Articles of Association , whereas there is no restriction on the transferability of the shares of a Public company
5 .Issue of Prospectus : A Private Company is prohibited from inviting the public for subscription of its shares, i.e. a Private Company cannot issue Prospectus, whereas a Public Company is free to invite public for subscription i.e., a Public Company can issue a Prospectus.
6. Number of Directors : A Private Company may have 2 directors to manage the affairs of the company, whereas a Public Company must have atleast 3 directors.
7. Consent of the directors : There is no need to give the consent by the directors of a Private Company, whereas the Directors of a Public Company must have file with the Registrar a consent to act as Director of the company.
8. Qualification shares : The Directors of a Private Company need not sign an undertaking to acquire the qualification shares, whereas the Directors of a Public Company are required to sign an undertaking to acquire the qualification shares of the public Company .
9. Commencement of Business : A Private Company can commence its business immediately after its incorporation, whereas a Private Company cannot start its business until a Certificate to commencement of business is issued to it.
10. Shares Warrants : A Private Company cannot issue Share Warrants against its fully paid shares, Whereas a Private Company can issue Share Warrants against its fully paid up shares.
11. Further issue of shares : A Private Company need not offer the further issue of shares to its existing share – holders, whereas a Public Company has to offer the further issue of shares to its existing share – holders as right shares. Further issue of shares can only be offer to the general public with the approval of the existing share – holders in the general meeting of the share – holders only.
12. Statutory meeting : A Private Company has no obligation to call the Statutory Meeting of the member, whereas of Public Company must call its statutory Meeting and file Statutory Report with the Register of Companies.
13. Quorum : The quorum in the case of a Private Company is TWO members present personally, whereas in the case of a Public Company FIVE members must be present personally to constitute quorum. However, the Articles of Association may provide and number of members more than the required under the Act.
14. Managerial remuneration : Total managerial remuneration in the case of a Public Company cannot exceed 11% of the net profits, and in case of inadequate profits a maximum of Rs. 87,500 can be paid. Whereas these restrictions do not apply on a Private Company.
15. Special privileges : A Private Company enjoys some special privileges, which are not available to a Public Company.
2. Minimum number of members : Minimum number of members required to form a private company is 2, whereas a Public Company requires atleast 7 members.
3. Maximum number of members : Maximum number of members in a Private Company is restricted to 50, there is no restriction of maximum number of members in a Public Company.
4. Transerferability of shares : There is complete restriction on the transferability of the shares of a Private Company through its Articles of Association , whereas there is no restriction on the transferability of the shares of a Public company
5 .Issue of Prospectus : A Private Company is prohibited from inviting the public for subscription of its shares, i.e. a Private Company cannot issue Prospectus, whereas a Public Company is free to invite public for subscription i.e., a Public Company can issue a Prospectus.
6. Number of Directors : A Private Company may have 2 directors to manage the affairs of the company, whereas a Public Company must have atleast 3 directors.
7. Consent of the directors : There is no need to give the consent by the directors of a Private Company, whereas the Directors of a Public Company must have file with the Registrar a consent to act as Director of the company.
8. Qualification shares : The Directors of a Private Company need not sign an undertaking to acquire the qualification shares, whereas the Directors of a Public Company are required to sign an undertaking to acquire the qualification shares of the public Company .
9. Commencement of Business : A Private Company can commence its business immediately after its incorporation, whereas a Private Company cannot start its business until a Certificate to commencement of business is issued to it.
10. Shares Warrants : A Private Company cannot issue Share Warrants against its fully paid shares, Whereas a Private Company can issue Share Warrants against its fully paid up shares.
11. Further issue of shares : A Private Company need not offer the further issue of shares to its existing share – holders, whereas a Public Company has to offer the further issue of shares to its existing share – holders as right shares. Further issue of shares can only be offer to the general public with the approval of the existing share – holders in the general meeting of the share – holders only.
12. Statutory meeting : A Private Company has no obligation to call the Statutory Meeting of the member, whereas of Public Company must call its statutory Meeting and file Statutory Report with the Register of Companies.
13. Quorum : The quorum in the case of a Private Company is TWO members present personally, whereas in the case of a Public Company FIVE members must be present personally to constitute quorum. However, the Articles of Association may provide and number of members more than the required under the Act.
14. Managerial remuneration : Total managerial remuneration in the case of a Public Company cannot exceed 11% of the net profits, and in case of inadequate profits a maximum of Rs. 87,500 can be paid. Whereas these restrictions do not apply on a Private Company.
15. Special privileges : A Private Company enjoys some special privileges, which are not available to a Public Company.
Information Required for Name Approval
The following information is required for seeking name approval.
1. Name of the applicant which should be one of the promoters
2. Address of the applicant - this is where all communication will be sent by Registrar of
Companies (ROC)
3. Proposed name of the company
4. Alternative names
5. Significance of the first word of the proposed name. This makes it easier to get a desired
name.
6. Names of the proposed first directors – minimum 2 in the case of a private company and
3 in the case of a public company
7. Addresses, dates of birth, father’s/husband’s names of the proposed directors
8. Authorised Share Capital – minimum INR 100000 in the case of a private limited and
INR 500000 in the case of a public company
9. Objects of the company in brief.
10. Address of Registered office of the proposed company. If a place is not finalized, this
information can be given at the time of incorporation.
11. Application fee for approval of name of INR 500 has to be remitted in cash.
1. Name of the applicant which should be one of the promoters
2. Address of the applicant - this is where all communication will be sent by Registrar of
Companies (ROC)
3. Proposed name of the company
4. Alternative names
5. Significance of the first word of the proposed name. This makes it easier to get a desired
name.
6. Names of the proposed first directors – minimum 2 in the case of a private company and
3 in the case of a public company
7. Addresses, dates of birth, father’s/husband’s names of the proposed directors
8. Authorised Share Capital – minimum INR 100000 in the case of a private limited and
INR 500000 in the case of a public company
9. Objects of the company in brief.
10. Address of Registered office of the proposed company. If a place is not finalized, this
information can be given at the time of incorporation.
11. Application fee for approval of name of INR 500 has to be remitted in cash.
Memorandum & Articles of Association – Facts to Remember
The following are some critical facts to remember in executing M&A of A.
1. The promoters in their own handwriting have to give the following details in the Memorandum
and Articles of association of the company:
· Name
· Occupation
· Father’s/husband’s name
· Complete Address
· Number of Shares subscribed
The Memorandum and Articles have to be signed by all the promoters and witnessed.
The person/s witnessing has/have to give the following details in their own handwriting:
· Name
· Occupation
· Father’s/husband’s name
· Complete Address
Signing outside India
In case the Memorandum and Articles is to be signed by any of the promoters out side India, then
the signing should be done in the presence of Consul of India at the Indian Consulate.
Share Capital
The minimum authorised share capital for incorporating a Private Limited company is
INR 100,000.
The minimum authorised share capital for incorporating a Public Limited company is
INR 500,000.
Number of Promoters
For incorporating a Private Limited Company a minimum of two promoters are required.
For incorporating a Public Limited Company a minimum of seven promoters are required.
1. The promoters in their own handwriting have to give the following details in the Memorandum
and Articles of association of the company:
· Name
· Occupation
· Father’s/husband’s name
· Complete Address
· Number of Shares subscribed
The Memorandum and Articles have to be signed by all the promoters and witnessed.
The person/s witnessing has/have to give the following details in their own handwriting:
· Name
· Occupation
· Father’s/husband’s name
· Complete Address
Signing outside India
In case the Memorandum and Articles is to be signed by any of the promoters out side India, then
the signing should be done in the presence of Consul of India at the Indian Consulate.
Share Capital
The minimum authorised share capital for incorporating a Private Limited company is
INR 100,000.
The minimum authorised share capital for incorporating a Public Limited company is
INR 500,000.
Number of Promoters
For incorporating a Private Limited Company a minimum of two promoters are required.
For incorporating a Public Limited Company a minimum of seven promoters are required.
How to get Name Availability
Company law requires that the name of each company should be unique. As such, the proposed
name of the company to be formed has to be approved by the Registrar of Companies and
blocked till registration. The following is the process to get availability of name.
1. Promoters have to file an application in Form 1A giving the following particulars:
· Names and addresses of promoters
· Proposed name of the company
· Alternative names of the proposed company. This is required if the proposed name is
not available.
· Type of company - Private or Public
· Brief objects of the company
· Proposed Directors and their addresses
· Proposed address of the company
· Authorised Share Capital (Authorised capital is the one upto which company can
issue shares. The paid up capital can be lower than this).
· Details of Group companies, if any
· Details of fees paid for name availability
· Note about significance of the proposed name. This is because regulations have some
criteria based on which names are to be allowed.
2. A fee of INR 500 is to be paid along with the application.
3. Typically it takes 4 working days for the ROC to confirm availability of name/s. There
may happen iteration with the ROC to get the desired name.
4. If the proposed names are not approved, more alternative names have to suggested.
5. On approval of name, the Registrar will issue a name allotment letter and will block the
name.
name of the company to be formed has to be approved by the Registrar of Companies and
blocked till registration. The following is the process to get availability of name.
1. Promoters have to file an application in Form 1A giving the following particulars:
· Names and addresses of promoters
· Proposed name of the company
· Alternative names of the proposed company. This is required if the proposed name is
not available.
· Type of company - Private or Public
· Brief objects of the company
· Proposed Directors and their addresses
· Proposed address of the company
· Authorised Share Capital (Authorised capital is the one upto which company can
issue shares. The paid up capital can be lower than this).
· Details of Group companies, if any
· Details of fees paid for name availability
· Note about significance of the proposed name. This is because regulations have some
criteria based on which names are to be allowed.
2. A fee of INR 500 is to be paid along with the application.
3. Typically it takes 4 working days for the ROC to confirm availability of name/s. There
may happen iteration with the ROC to get the desired name.
4. If the proposed names are not approved, more alternative names have to suggested.
5. On approval of name, the Registrar will issue a name allotment letter and will block the
name.
How to form a company in India
The following steps are required to form a company (private or public) in India.
1. Get ‘name availability’ from Registrar of Companies (ROC).
2. Draft and execute Memorandum & Articles of Association and other documents.
3. Pay duties and fees
4. File Memorandum & Articles of Association and other documents with ROC
5. Represent with ROC for any reservations or comments he may have
6. Procure incorporation certificate from ROC.
7. Subscribe to the agreed share capital of the company
8. Obtain commencement certificate (for public companies)
1. Get ‘name availability’ from Registrar of Companies (ROC).
2. Draft and execute Memorandum & Articles of Association and other documents.
3. Pay duties and fees
4. File Memorandum & Articles of Association and other documents with ROC
5. Represent with ROC for any reservations or comments he may have
6. Procure incorporation certificate from ROC.
7. Subscribe to the agreed share capital of the company
8. Obtain commencement certificate (for public companies)
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