qwertyuiopasdfghjklzxcvbnmqwertyui

opasdfghjklzxcvbnmqwertyuiopasdfgh
jklzxcvbnmqwertyuiopasdfghjklzxcvb
nmqwertyuiopasdfghjklzxcvbnmqwer
tyuiopasdfghjklzxcvbnmqwertyuiopas
CORPORATE LEGAL
dfghjklzxcvbnmqwertyuiopasdfghjklzx
FRAMEWORK
cvbnmqwertyuiopasdfghjklzxcvbnmq
ASSIGNMENT 4
wertyuiopasdfghjklzxcvbnmqwertyuio
pasdfghjklzxcvbnmqwertyuiopasdfghj
klzxcvbnmqwertyuiopasdfghjklzxcvbn
mqwertyuiopasdfghjklzxcvbnmqwerty
SUBMITTED TO DR. MK NABI
SUBMITTED BY YOGESH KUMAR
M.COM FINAL YEAR
uiopasdfghjklzxcvbnmqwertyuiopasdf
20188962
18MCM040

ghjklzxcvbnmqwertyuiopasdfghjklzxc
vbnmqwertyuiopasdfghjklzxcvbnmrty
uiopasdfghjklzxcvbnmqwertyuiopasdf
ghjklzxcvbnmqwertyuiopasdfghjklzxc
ANSWER 1 A public company is a corporation whose ownership is distributed
amongst general public shareholders via the free trade of shares of stock on
exchanges or over-the-counter markets. Although a small percentage of shares are
initially floated to the public, daily trading in the market determines the value of
the entire company.

It is considered to be "public" since shareholders, who become equity owners of

the company, may be composed of anybody who purchases stock in the firm.

DIFFERENCE BETWEEN PUBLIC AND PRIVATE COMPANY

Basis for
Public Company Private Company
Comparison
A public company is a company A private company is a
Meaning which is owned and traded company which is owned
publicly and traded privately.
Minimum members 7 2
Maximum members Unlimited 200
Minimum Directors 3 2
Suffix Limited Private Limited
After receiving certificate of
After receiving certificate
Start of business incorporation and certificate of
of incorporation.
commencement of business.
Statutory Meeting Compulsory Optional
Issue of prospectus /
Statement in lieu of Obligatory Not required
prospectus
Public subscription Allowed Not allowed
5 members must present in 2 members must present in
Quorum at AGM
person. person.
Transfer of shares Free Restricted

PRIVILEDGES AND EXEMPTIONS ENJOYED BY PRIVATE COMAPNY

 Only two persons (minimum) are required to form a private company.

 Only two directors (minimum) are needed to run such a company.
  It can be incorporated with a paid up share capital of one lakh only.
 Private company is not required to issue a prospectus.
 Condition of minimum subscription does not apply to it.
 Only two members constitute the quorum for meeting of its
 All directors can be permanent directors. They need not retire by
 It need not have independent directors on the Board.
 A person can be a director in 20 companies.
 Rules regarding the overall or maximum limit for managerial remuneration
do not apply to such companies.
 It need not constitute an audit committee of the Board.

1.MEMBER

a private company can be formed with only 2 persons as member

2. Prospectus:

A private company need not issue prospectus. It is also not required to file a
‘statement in lieu of prospectus’ with the Registrar before allotment of shares.
Thus a private company is exempted from complying with the provisions of the
Act regarding the issue of the prospectus.

3. Certificate of commencement of business:

A private company can start business immediately after incorporation. It need not
apply for a certificate to commence business.

4. Minimum paid up capital:

A private company is required to have a minimum paid up capital of 1 lakh. [Sec.3

(l) (iii)

5. Exemption regarding managing director:

The restriction as to number of companies of which a person may be appointed

managing director and prohibition of appointment of managing director for more
than 5 years at a time are not applicable to private companies. (Sees. 316 & 317)

6. Exemption regarding managerial remuneration:

The provisions of the Act regarding fixing or increasing the remuneration of
managerial personnel of the company are not applicable to private companies.
(Sees. 198, 309, 310 & 311)

7. Audit committee:

A private company is not required to constitute an audit committee of the Board

(Sec. 292A).

8. Exemption regarding statutory meeting:

A private company need not hold a statutory meeting and file a statutory report
with the Registrar. (Sec. 165)

9. Exemption regarding inter-corporate loans and investments:

The provisions of the Act relating to investment of funds by a company in other

companies or companies under the same management are not applicable to private
companies. (Sec. 372A)

10. Regarding Balance sheet:

A private company is required to file copies of balance-sheet and profit and loss
account to the Registrar of Companies but no person other than member of the
company is entitled to inspect the balance-sheet and profit and loss account. (Sec
220)

11. Exemption regarding power to prevent changes in the board:

The provisions of the Act giving power to the Company Law Board to prevent
changes in the Board likely to affect prejudicially the company are not applicable
to a private company. [Sec. 409]

Thus, a private company, on the one hand, is able to enjoy all the benefits of a joint
stock company such as legal entity, perpetual existence, limited liability etc., and
on the other hand, it is free from numerous legal restrictions which apply to a
public company. This grants it a greater freedom of action than a public company
in several respects.
ANSWER 3

COMPANIES ACT 2013

the Companies Act is an Act formed to consolidate and amend the laws related to
the companies and it extends to whole of India. It equally applies to all the
companies that are incorporated under this Act and any company which is
incorporated before the formation of Companies Act. It implies to all the insurance
companies except for once exempted under the Insurance Act, 1938. It also implies
to all the banking companies except one's exempted under the Banking Regulation
Act, 1949. It also implies to all the companies which are engaged in generation or
supply of electricity except the ones that are inconsistent for its provision under
Electricity Act, 2003.

Company Formation under the Companies Act, 2013:

Under this act, a company may be formed for any lawful purpose by seven or more
members to incorporate a public company and two or more members for a private
company or by a single person as One Person Company.

The company must subscribe their names into a memorandum and must comply
with all the registration requirements under the Companies Act, 2013.

Memorandum of a Company:

The Memorandum of a company should state the name of the company with last
word as "limited” in case it is a public limited company and "Private Limited", in
case it’s a private limited company. Then they must mention the state in which the
registered office of company will be situated, the objects of the company and
liability of various members of the company.

In case of a company is limited by the shares, then the liability of its members is
limited to the unpaid amount or the shares they hold.

In case the company is limited by a guarantee, then the amount of each member’s
contribution towards the assets of a company, if the company is wound up or he
ceases to be a member of the company within one year of formation of the
company. Or else each member shall contribute towards the costs, charges, and
expenses of winding up or adjustments of rights towards the contributions should
be made amongst themselves.

The name stated in the memorandum should be unique and should not be identical
or resemble very closely to any existing company which is already registered under
the Companies Act, 2013.

Also the company cannot be registered with a name which have a word or
expression which gives an impression of it being connected in any way to the
patronage of Central Government, or State Government or local Authority or any
corporation or body which is constituted by it.

The memorandum must be in forms as specified in Tables A, B, C, D, and E of

Schedule I as applicable to such company.

Article of a Company:

Then a company must also have articles which must contain the regulations for its
management and should have provisions to be adjusted later by following the
prescribed procedure. It should also define the procedure to adjust these articles.

The articles must be presented in forms as specified in Tables F, G, H, I, and J of

Schedule I as applicable to such a company. It’s up to the company to opt for some
or all the regulations which are contained in the model article which is applicable
to that company