drafts of article of association for a private company

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Rajeswary A G (Querist)

10 January 2014 my application for new company got cancelled becauseprivate limited company definition is not as per CA 2013. What does it mean?

CS Adnan Shaikh

CS Adnan Shaikh (Expert)

10 January 2014 Dear Rajeswary,

The definition of private company which is provided in the Companies Act, 2013 should be inserted in the Articles of Association in the definition part and any other place where private company is defined. The below is the definition -

“Private Company” means a Company having a minimum paid-up share capital of one lakh rupees or such higher paid-up share capital as may be prescribed, and which by its articles,-

i. Restricts the right to transfer its shares;
ii. Except in case of One Person Company, limits the number of its members to two hundred;

Provided that where two or more persons hold one or more shares in a company jointly, they shall for the purpose of this clause, be treated as a single member:

Provided further that –
A. A person who are in the employment of the company; and
B. Persons who, having been formerly in the employment of the company, were members of the company while in that employment and have continued to be members after the employment ceased,
C.
Shall not be included in the number of members; and

iii. Prohibits any invitation to the public to subscribe to any securities of the company (As per Companies Act, 2013)

This requirement has been made after certain sections were notified on 12.09.2013.

Regards,
Adnan

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