A company means "a Company formed and registered under the Companies Act 1956 or an existing company.  Companies incorporated under the said Act (Companies Act 1956) are mostly business companies but they may also be formed for promoting Art, Charity, Research, Religion commerce or any other useful purpose.

Definition of Company : 

     A company is a voluntary association of persons formed for some common purpose, with capital divisible into parts, known as shares, and with limited liability. It is a creation of law and is sometimes known as an artificial person with a perpetual succession and a common seal.

When a private company becomes a public company

1. Conversion by default : (Section.43 of the Companies Act 1956). 

           Where a  default is made by a private company in complying with the essential requirements of a private company (viz, restriction on transfer of shares, limitation of the member of fifty, and prohibition of invitation to the public to buy shares or debentures), the company ceases to enjoy some of the privileges of  a private company (Section 43).the company in such a case is treated as public company and the provision of the Companies Act apply to it as if were not a private company

2. Conversion by operation of law. (Section 43-A).

A private company become a public company...

1. Where not less than 25 % of its paid –up share capital is held by one or more bodies corporate. In computing this percentage no accounts is taken of the company held by a banking company on trust or executors;

3. Conversion by choice (Section,44) : If a private company alters its articles so that they do not contain the provisions which make it an alteration, it must then file with the registrar ,within thirty days, either a prospectus or a statement in lieu of prospectus. When this is done ,the company becomes a  public company

The Company must also :

(1) file a copy of the resolution altering the articles within thirty days of passing thereof ,with there register;

(2) take steps to raise its membership to at least seven if it is below that number on the date number on the date of conversion ,and also increase the number of directors to three if it is below that number ;and

(3) Alter the regulations contained in the articles which are inconsistent with those of a public company.

See also...

Characteristics of a Company

Difference between Lock-out and Lay-off


Post a Comment

See Also..