Companies Act 2013 of Private Company

Companies Act 2013 of Private Company: The Companies Act of 2013 in India has revolutionised the regulatory landscape for private companies, providing a clear framework that balances operational flexibility with stringent compliance requirements. Private companies, defined under Section 2(68) of the Act, play a pivotal role in the country's business ecosystem by offering limited liability and fostering entrepreneurship.

Companies Act 2013 of Private Company

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Types of Private Limited Companies

• Limited by shares : Here, members' liabilities are restricted to the amount unpaid on their shares in the company.
• Limited by guarantee : Liability is limited to the specific amount that members agree to pay if the company is wound up.
• Unlimited liability : In this scenario, members bear unrestricted liability, which could potentially lead to the sale of their assets if the company faces liquidation.

Features of Companies Act 2013 of Private Company

1. Membership: Private companies can have a minimum of two and a maximum of 200 members, excluding certain categories like former employees.
2. Name: The name must include "Private Limited" at the end, distinguishing it from public companies.
3. Memorandum of Association: This document outlines the company's name, registered office address, objectives, and members' liability extent. It also details the subscribers to the Memorandum.
4. Restrictions on Share Transfer: Shares cannot be freely traded on stock exchanges , and there are limitations on their transfer as per the Articles of Association.
5. Regulatory Compliance: Private companies must adhere to specific regulations regarding their name, Articles of Association, and member details, and they must share transfer policies as per the Companies Act.
6. Financial Reporting: Compared to public companies, they enjoy certain exemptions in financial reporting requirements, which promotes privacy in financial matters.
7. Governance: Private companies typically have a more flexible governance structure, often with simplified decision-making processes.

Step to Register Companies Act 2013 of Private Companies

1. An affidavit on stamp paper from subscribers affirming their intent to become company shareholders.
2. Proof of office address, such as a rental agreement, sale deed, or ownership deed of the office premises, is required.
3. If the registered office is rented or leased, a No Objection Certificate (NOC) from the property owner.
4. Copies of recent utility bills (e.g., water, electricity, gas) not exceeding two months old.
5. Identity and address proof of all directors involved in the company.

Formation of Private Companies

Privileges of Private Companies

1. Minimum Director Requirement: Only two directors are required to form a private limited company, offering flexibility in management structure.
2. Annual General Meeting Reports: Unlike public limited companies, private companies are not obligated to prepare annual general meeting reports, simplifying administrative requirements.
3. Independent Directors: There is no mandate for private companies to appoint independent directors, allowing more control over board composition.
4. Director Disqualification: Private companies can disqualify a director based on additional grounds per their internal policies.
5. Director Remuneration: They have the autonomy to offer directors higher remunerations and salaries than other types of companies, facilitating competitive compensation structures.

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