Classification of the Company, Usually, companies are of the types:
- Statutory Company: Company created by the special act of the parliament or royal charter is known as statutory company.
- Registered Company: Company that is formed by registration within the registrar of Joint Stock Companies, Registered companies may be of two types.
Unlimited Liability Company: a company whose Shareholder’s liability is unlimited is known as unlimited liability company.
Limited Liability Company: A company whose shareholder’s liability is limited is Known as limited liability company. Limited Liability Companies may again be of two types:
- Company Limited by Guarantor: This types of company’s shareholder’s liability is limited by the guarantees of one some shareholder.
- Company Limited by Share: This types of company’s shareholder’ Liability is limited by the share value. This type of company is also of types:
- Public Limited Company.
- Private Limited company.
The most prevalent in the modern business world are of these two type of which Public limited company is more dominant and widely accepted as effective from business organization.
Important Documents of a Company
Memorandum of Association: Memoranda Association is main document of a company. This document the identity of a company. It is the most important document of a company. It must be prepared initially and submit to the registrar of company with application for registration. In the complies act, MA is defined as “Memorandum means the memorandum of a company as originally formed or as altered in pursuance of this Act.” Lord Cairns defined, “The Memorandum of the Association of a company is its charter and defines the limitations of the powers of the company Established this Act”.
- Capital Claus.
- Consent: This clause contain the declaration of deflation of qualifying shares by the promoters,. The name, address and share taken by the promoters should be mentioned. The promoters should sing the declaration. The signatures should be verified and witnessed by a witness.
- Liability Clause.
Conversion of private Limited Company into public Limited Company
Public Limited Company enjoys a number of privileges over Private Company, which must operate through of restrictions. Further, because of limited number of members, Private Company may face capital shortage to support business expansion. Consequently, private company may be converted into public company in accordance with the rules of the Companies Act. The following procedure should be followed in the conversion process:
Change of the Article of Association
!. Article of Association of the company should be changed to change the following rules-
A. Restriction on capital collection capital now can be collected freely from the public;
B. The rule of maximum of shareholders of 50.
c. The of transfer of share outside the excising shareholders.
d. The rule that share cannot be distributed among the public.
After making the above changes, new AA should be prepared and should be submitted t to the registrant of company along with the following documents.
2. Copy of prospectus or statement in lieu of prospectus.
3. List of name of directors.
Provided that for conversion, minimum number of shareholder of a private company must be save and the conversion proposal should be passed in a special meeting of shareholder through a special resolution and theses effort should be according to the rule of companies Act, 1994.
On the performance of above formalities, if the registers are satisfied, he writes the private company as public company and the company can work as public limited company.