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Closing or Changing a Business
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Closing or Changing a Business Changing a Business Type
Closing or Changing a Business Winding Up a Registered Company and an Unregistered Company
Closing or Changing a Business Regulatory Requirements
   
 
Closing or Changing a Business
Closing or Changing a Business

Changing a Business Type

A Company is a voluntary association of persons formed for the purpose of doing business, having a distinct name and limited liability. It is a juristic person having a separate legal entity distinct from the members who constitute it, capable of rights and duties of its own and endowed with the potential of perpetual succession.

In India, the Companies Act,1956, provides for the formation of a company, powers and responsibilities of the directors and managers, raising of capital, holding of company meetings, maintenance and audit of company accounts, powers of inspection and investigation of company affairs and regulating other affairs of the companies. The Act applies to the whole of India and to all types of companies, whether registered under this Act or an earlier Act.

The Companies Act is administered by the Central Government through the Ministry of Corporate Affairs and the Offices of Registrar of Companies, Official Liquidators, Public Trustee, Company Law Board, Director of Inspection, etc. The Registrar of Companies controls the task of incorporation of new companies and the administration of running companies.Under the Companies Act, an entrepreneur can form two types of companies, namely a private company or a public company.

A Private Company is one, the articles whereof contains the following restrictions:-

  • Restricts the minimum paid up share capital to such an amount as may be prescribed but which shall not be less than rupees one lakh;


  • Restricts the rights of members to transfer its shares, if any;


  • Limits the number of its members to fifty excluding the past or present employees of the company who are members of the company;


  • Prohibits any invitation to the public to subscribe for any shares or debentures of the company;


  • Does not invite or accept any deposits from persons other than its members, directors or their relatives

Also, the minimum number of members in a private company is two and such a company must have the words 'Pvt Ltd' as the last part of its name.

A Public Company, as defined in the Companies Act, has the following features:-

  • Its shares are freely transferable;


  • There is no ceiling on its membership;


  • It can invite general public to subscribe to its shares;


  • It has a minimum paid up capital of Rs. 5 lakhs or such higher paid up capital as may be prescribed;


  • it is a private company which is a subsidiary of a public company.

Also, the minimum number of members in a public company is seven and such a company must have the word 'Ltd' as last part of its nameAfter the formation of a company, an entrepreneur can change the type of its business organisation from public to private or vice versa. The Companies Act also contains the provisions for such conversions.

  Business Conversion of a Private Company into a Public Company
  Business Conversion of a Public Company into a Private Company
     
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Ministry of Corporate Affairs
The Companies Act,1956
The Companies (Amendment) Act, 2000
The Companies (Amendment) Act, 2002
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