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Definitions of Companies under Companies Act, 2013

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Definitions of Companies under Companies Act, 2013, This article is specifically about the definitions which are given under the Section 2 of the Companies Act, 2013 which have to be interpreted in a better way to know more about the Act in detail and to know the various consequences due to lack of proper interpretation of the definitions which might result into huge penalties. Now check more details for “Definitions of Companies under Companies Act, 2013” from below…..

Definitions of Companies under Companies Act, 2013

Definition of Private Company :

1. As per Act:

“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 purposes of this clause, be treated as a single member:

Provided further that—

(A) persons 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, shall not be included in the number of members; and

(iii) prohibits any invitation to the public to subscribe for any securities of the company.

2. Interpretation:

Private Limited Company can be incorporated by minimum share capital of Rs. 1 lakh. The number of members in the company will exclude the employees of the company while the joint members of a share would be regarded as 1 member. The private limited company would restrict the transfer of its shares to the public and would be limited to members only.

Definition of Public Company:

1. As per Act:

“public company” means a company which—

(a) is not a private company;

(b) has a minimum paid-up share capital of five lakh rupees or such higher paid-up capital, as may be prescribed:

Provided that a company which is a subsidiary of a company, not being a private company, shall be deemed to be public company for the purposes of this Act even where such subsidiary company continues to be a private company in its articles.

2. Interpretation:

Firstly the simple definition of the public limited company is that which is not a private limited company. Secondly here the minimum paid up capital required is of Rs. 5 lakh. The company which has been subsidiary of the company which may be any company except private company will be regarded as public company.

Definition of Small Company:

1. As per Act:

‘‘small company’’ means a company, other than a public company,—

(i) paid-up share capital of which does not exceed fifty lakh rupees or such higher amount as may be prescribed which shall not be more than five crore rupees; or

(ii) turnover of which as per its last profit and loss account does not exceed two crore rupees or such higher amount as may be prescribed which shall not be more than twenty crore rupees:

Provided that nothing in this clause shall apply to—

(A) a holding company or a subsidiary company;

(B) a company registered under section 8; or

(C) a company or body corporate governed by any special Act;

2. Interpretation:

Small company which whose share capital lies between 50 lakhs to 5 crores, turnover is between 2 crores to 20 crores.  The exclusions from the above to be called as small company are holding company, subsidiary company, section 8 company, and any body corporate which is specifically governed by special act such as Insurance companies, Banking companies, etc.

Definition of One Person Company:

1. As per Act:

“One Person Company” means a company which has only one person as a member,

2. Interpretation:

One person company means in which only one person is the member and is handling the operations of the business individually in the name of the company.

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About Yash Shah

Yash Shah is passionate article writer and has written more than 100 articles in the field of Finance, Insurance, Stock Market, Company Law, Auditing, Taxation and many others. In case of any queries or suggestions, you can reach the author @ [email protected], you can also catch him on facebook @ yashshah299

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