Private Limited Companies Under Kemya Company Law

A private company is defined in the Act (Section 30) as one which by its articles(a) Restricts the right to transfer its shares; and(b) Limits the number of its members to fifty, exclusive of persons in the employment of the company and of persons formerly in the company’s employment;(c) Prohibits any invitation to the public to subscribe for any shares or debentures of the company, and certifies in its annual return that it has not issued any prospectus to the public to subscribe to its shares or debentures.

Further, a private company may be an ordinary private company or an exempt private company.An exempt private company is a private company which satisfies the following conditions-
*.No body corporate holds any of its shares or debentures.
*.No person other than the holder has any interests in its shares or debentures.
*.The number of debenture holders does not exceed fifty.No body corporate is a director.
*.No person other than the directors, members or debenture holders can determine the company’s policy.
*.The benefits of any private company are that it need only have two members and may have only one director (although it must have a secretary, and the sole directorcannot be the secretary).
*.Further, a private company can commence business (and make binding contracts, and exercise its borrowing power, if any), immediately on incorporation.

Another advantage is that a private company need not hold a statutory meeting or send a statutory report to its members Sec 130 (10).Exempt private companies in addition enjoy certain other benefits such as with regard to reporting requirements and auditing requirements.This type of company is preferred by most ‘for profit’ organizations as it has relatively easy procedures for registration under the Companies Act, and the requirements for reporting are easier and less stringent than for public companies.