A company is a group or organisation of certain individuals formed for the purpose of conducting any type of business. According to the law, a corporation is defined as a non-natural or artificial legal organisation with the authority to acquire any property, enter into agreements in its own name, and litigate and be prosecuted by others.
As per Section 2(68) of the Companies Act of 2013, a “private company” is fundamentally defined as a business with a minimum paid-up share capital as required and whose articles limit the right to transfer its shares. The word “private” must be included in the name of a private firm. It can have up to 200 members. Members’ liability in a Private Limited Company is limited to the number of shares they own. Personal assets and business assets are treated separately. Individuals can purchase or sell shares in a Private Limited Company, becoming proprietors of the company. However, the shares cannot be exchanged publicly.
The different types of private limited companies are as follows:
Limited by Shares:
The money in this corporation is divided into little portions known as shares. Shareholders are introduced to these shares. In contrast, a private business limited by shares has limited liability for its shareholders. In layman’s terms, “limited by shares” means that the members of a limited by shareholders are only liable to the creditors of the private limited company up to the amount initially donated. For example, the nominal value and any installment paid in exchange for the private limited company issuing the shares In the event of the company’s insolvency or loss, shareholders’ personal assets are not at risk under the “limited by shares” regime.
Loans, equity, and grants are all viable funding sources for a company limited by shares. A organization limited by shares can be divided into two types: A Limited Company by Guarantee does not have the idea of shares. The members of the limited business by guarantee contribute small sums to pay off outstanding debts in the event of collapse. A public limited company is one that is typically listed on stock markets. A shareholder’s responsibility in a public limited company is limited to the amount of their shareholding.
Limited by Gaurantee:
A company limited by guarantee functions similarly to a regular private corporation limited by shares. It is registered at Companies House, must file annual accounts and returns, has directors, and so on. One significant difference is that it does not have a share capital or shareholders, but rather members who control it. There are no shareholders in a company limited by guarantee, but the firm must have one or more members. Subject to any special provisions in the articles of incorporation, members will be eligible to attend general meetings and vote, which in most cases means they will be able to select and dismiss directors and have ultimate power over the business. This is how many clubs function. At the Annual General Meeting, members elect a committee to govern the club on their behalf, pursuant to the restrictions outlined in the group’s constitution. If the club is incorporated, the same rules apply and are outlined in the articles of incorporation.
Unlimited Company:
A private corporation is sort of an unlimited company. It shares several characteristics with a limited firm. It is registered at Companies House and has members (often shareholders) and directors, as well as other basic features of a limited company. The shareholders (or members) of this form of company, on the other hand, have unlimited responsibility. This means that in the event of the company’s insolvency, each member is jointly and severally liable for its debts. If the firm needs more funds to satisfy its obligations or liabilities upon liquidation, it can ask shareholders to donate whatever amount is needed to make up the difference.
Companies are critical to the prosperity of any country, which is why the Companies Act of 2013 is strictly enforced. The aforementioned act gives stakeholders and other affiliates more authority. According to the Companies Act of 2013, these companies have a very specific proposition. It provides for the revolution of accountants and corporate reviews in the case of extensively imported enterprises. It prohibits accountants from providing these services to the company where they are to ensure the person’s individuality and responsibility.
