The Private company privileges (which is not a subsidiary of any public company)
The private company privileges details are given below. The companies act 1956 grants several exemptions and concessions to private companies as compared to public companies. Briefly, these are :
Private company privileges
(i) two or more persons may form a private limited company whereas in the case of public limited company a minimum of 7 persons is required [Section 12 (1)].
(ii) a private limited company may assign shares without issuing a delivering or prospectus to the registrar a term in behalf of prospectus.
(iii) the restrictions contained in section 77 (2) on giving loan etc., for purchase of any shares in the company or in its holding company. It is not applicable to a purely private limited company.
(iv) the provisions of section 81 as regards further issue of capital do not apply to private limited companies.
(v) (a) the restrictions that a company can have only two types of capital as contained in sections 85 and 86 are not applicable to private companies (section 90).
(b) private companies may provide for disproportionate voting rights since section 87 to 89 of the act are not applicable to them (section 90).
(vi) private companies can under its Articles enforce the restrictions contained therein against the right to transfer the shares of such company.
(vii) the restrictions on the commencement of business contained in section 149 [ except those in sub-section (2-A)] are not applicable to private limited company.
(viii) private companies are exempted from holding statutory meetings as required by section 165.
(ix) a private limited company has been given privilege to amend all or any of the provisions of section 170 to 186 relating to conduct of the general meetings.
(x) the provisions contained in section 198 with respect to overall managerial remuneration and maximum managerial remuneration in case of inadequacy or absence of profit.
The section 310 regarding increase in remuneration are not applicable in case of a private limited company.
Private limited company privileges
(xi) in a private limited company a firm or body corporate can be appointed to an office or place of profit.
(xii) copies of balance sheets and profit & loss accounts of a private limited company may be filed separately with the registrar. No person other than a member is entitled to inspect the profit & loss account.
(xiii) a private company need not have more than 2 directors.
(xvi) the provisions contained in section 255 with respect to retirement of directors by rotation are not applicable to a private limited company.
(xv) the provisions requiring the giving of 14 days notice ny new candidates seeking election as directors do not apply to a private limited company which is not a subsidiary of public limited company.
(xvi) central governments approval is not required to increase the number of directors beyond 12 in a private limited company.
(xvii) the provisions relating to the manner of filling up casual vacancies among directors. The duration of the period of office of those so appointed the provision requiring that the appointment of directors should be voted on individually.
The requirement that the consent of each candidate for directorship should be filed with the Registrar do not apply to a private company. Unless it is subsidiary of a public limited company.
(xviii) The provision of option to adopt relative perception for ordination of directors does not apply to a private company unless it is subsidiary of a public limited company.
(xix) consent of directors to act as such is not required to be registered with the Registrar of Companies in case of a private limited company.
(xx) restrictions contained in Section 266 on appointment or advertisement of directors are not applicable to private companies.
Private limited company and public limited company
(xxi) Provisions of sections 268, 269, 309,310 and Schedule XIII in respect of the appointment or reappointment and payment of remuneration of managing or whole time director are not applicable to private company.
Similarly, any amendment of provision in the agreement or Memorandum of Association relating to them also does not require Government approval in case of a private limited company.
(xxii) the provisions of sections 270 and 273 with regard to the maximum amount and time for acquiring share qualification are not applicable in case of private limited company.
(xxiii) a private limited company which is not a subsidiary of a public limited company may by its articles provides recusation for appointment of director.
(xxiv) the constrictive stipulations as considers the entire majority of directorships that may any person may hold do not have any directorship held in private companies which are not subsidiaries of a public companies.
(xxv) a private limited company which is not a subsidiary of a public limited company may by its articles providing additional grounds for vacating the office of director.
(xxvi) a private limited company need not constitute a committee of the Board known as ‘Adult Committee’.
(xxvii) restrictions on the powers of the Board of Directors contained in Section 293 are not applicable in case of private companies.
(xxviii) approval of the central government is not necessary for granting loans to directors etc. in case of private limited company.
(xxix) prohibition contained in section 300 against participation in board proceedings or to vote on them by interested director are not applicable to a private limited company.
(xxx) a private limited company which is not a subsidiary of a public limited company is not required to enter the date of birth in the Register of Directors.
(xxxi) the provisions relating to the extent and manner of payments of remuneration to directors. The requirement that any increase in the remuneration of a director including a managing or whole-time director.
Any amendment of any provision relating thereto must have for their validity.The approval of central government are confined only to public limited companies and private limited companies which are their subsidiaries.
A private limited company which is not a subsidiary is free from these restrictions.
(xxxii) in a private limited company the managing director may be appointed for a period of more than 5 years at a time.
(xxxiii) Determination of net profits for remuneration : The provisions relating to the
(a) percentage of quantum of remuneration payable to a managing agent.
(b) method of determination of net profits, for determining such percentage or quantum.
(c) prohibition of payment of office allowance.
(d) payment of additional remuneration.
(e) time and manner of payment of remuneration are all not to work to a private limited company which is not a subsidiary of a public limited company.
(xxxiv) Inter-corporate loans and Investments : This section does not apply to a private limited company which is not a subsidiary of a public limited company.
(xxxv) Restrictions as to managers : provisions restricting the number of companies for which a person may be appointed manager and remuneration of manager and provisions of sections 269, 310, 311, 312, 317 with regard to a manager do not apply to private companies unless they are subsidiaries.
(xxxvi) Power to prevent changes in Board : The special powers of interference given to the [Company Law Board] to prevent change in the Board of Directors of a company.
Where in its opinion such change will be prejudicial to the interests of the company are not extended to the case of a private limited company unless it is a subsidiary a public limited company.
(xxxvii) Company an undisclosed principal : Contracts entered into by an agent of private limited company, which is not a subsidiary of a public limited company.
If entered into by him on behalf of the company as undisclosed principal, need not be recorded by a memorandum in writing their registration in chennai subsidiaries.
(xxxviii) Producer Companies : Once registration as bodies corporate under section 581C(1) will always be a private limited company.