Forming a pvt co.with 50 members-any problem ?

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This query is : Resolved

CA Abhishek Singh (Querist)

23 June 2012 Hello everyone,

one of our client want to form a private ltd company with 50 members.

capital of the company will be rs.100000.

after incorporation all these members will bring further money into the business and that will be shown as loan.

is their any problem in it. can ROC raise any objection since the number of members are large ?

CMA. CS. Sanjay Gupta

CMA. CS. Sanjay Gupta (Expert)

24 June 2012 No problems. Please refer section 3(1)(iii) of the Companies Act, 1956.

Section 3 (1) (iii) defines a private company as one which—

has a minimum paid-up share capital of Rs.1 Lakh or such higher capital as may be prescribed; and by its Articles Association
1) restricts the right of transfer of its share;
2) limits the number of its members to 50 which will not include:
(i) members who are employees of the company; and
(ii) members who are ex-employees of the company and were members while in such employment and who have continued to be members after ceasing to be employees
3) prohibits any invitation to the public to subscribe for any shares or debentures of the company; and
4) Prohibits any invitation or acceptance of deposits from persons other than its members, directors or their relatives.

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