Foundation of public limited company

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Querist : Anonymous

Querist : Anonymous (Querist)

07 November 2013 Basic Question

1. Basic Requirement for foundation of public limited company.
2. Structure of Director, Board of Director, Director Audit, Authorized Share capital, procedure of share issue to public. sebi registration etc.

3. The same if a company run under pvt limited company want to convert in public limited company to interest to find investors and grow the company.

Thanks
Manish Kumar

Ajay Mishra

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11 November 2013 Go to the following link it will help you on company formation:

http://blog.abhyankarcs.com/company-formation-in-india/how-to-register-a-company-in-india-incorporation-formation/

Ajay Mishra

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11 November 2013 For conversion of private company into public company, go to the following link:

https://www.caclubindia.com/share_files/procedure-for-change-of-name-status--46457.asp#.UoBtXRenyVE

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Ajay Mishra

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11 November 2013
Section 2(6) of the Act has defined the term 'Board of directors', means in relation to a company, means the Board of directors of the company. The directors collectively are referred to in the Act as the "Board of directors" or "Board". [Section 252(3)]

The expression 'Board of directors' means a group of those individuals elected by the shareholders of a company to manage the business affairs of the company.
Since a company is an artificial legal person created by law, therefore, it is necessary to act only through the agency of natural persons. It can only act through human beings, and it is the directors through whom mainly the company acts. It is on account of the peculiar character of a company that the need for directors arises. Therefore, the management of a company is entrusted to a body of persons called 'Board of directors'.

Total strength of the Board of directors:

The total strength of the Board is fixed in the Articles. Normally, the Articles contain the maximum number of directors as twelve, as the prior approval of the Central Government is required to have more than twelve directors in a public limited company. A private company can have more than twelve directors if its Articles permit.

Minimum number of directors:

Section 252 provides that every public company shall have at least three directors and every private company shall have at least two directors at all time in the Board of directors of the company.

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11 November 2013
Types of Directors

Following are the categories of directors who constitute 'Board' of a company:—

1. Ordinary Directors
Ordinary directors are also referred to as simple directors who attends Board meeting of a company and participate in the matters put before the Board. These directors are neither whole time directors nor managing directors.
2. Managing Director
Managing Director is a director who, by virtue of an agreement with the company or of a resolution passed by the company in general meeting or by its Board of directors or, by virtue of its Memorandum or Articles of Association, is entrusted with substantial powers of management which would not otherwise be exercisable by him, and includes a director occupying the position of a managing director, by whatever name called.
6.3. Whole-time/Executive Directors
Whole-time Director or Executive Director includes a director in the whole-time employment of the company.
4. Additional Directors
Additional Directors are appointed by the Board between the two annual general meetings subject to the provisions of the Articles of Association of a company. Additional directors shall hold office only up to the date of the next annual general meeting of the company. Number of the directors and additional directors together shall not exceed the maximum strength fixed for the Board by the Articles.
5. Alternate Director
An Alternate Director is a person appointed by the Board if so authorised by the Articles or by a resolution passed by the company in the general meeting to act for a director called "the original director" during his absence for a period of not less than three months from the State in which meetings of the Board are ordinarily held. Generally, the alternate directors are appointed for a person who is Non-resident Indian or for foreign collaborators of a company.
6. Professional Directors
Any director possessing professional qualifications and do not have any pecuniary interest in the company are called as "Professional Directors". In big size companies, sometimes the Board appoints professionals of different fields as directors to utilise their expertise in the management of the company.
7. Nominee Directors
The banks and financial institutions which grant financial assistance to a company generally impose a condition as to appointment of their representative on the Board of the concerned company. These nominated persons are called as nominee directors.

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11 November 2013
Presentation of the share capital

A company has to disclose its share capital in the various statements and returns viz Annual Return, Balance Sheet, Forms and various applications to be submitted to various authorities from time to time. It has to represent the status of share capital as per requirements, which may be shown as under:

1. Authorised
The capital clause of the Memorandum of Association of a company contains description of the authorised share capital. This is the capital with which a company is to be registered originally or the increased authorised share capital as the case may be. The company is required to pay adequate registration fee to the concerned Registrar of Companies.
2. Issued
Issued capital is a part of the authorised capital, which is offered for subscription in form of shares of the company. It also includes share capital issued for consideration otherwise than in cash.
3. Subscribed
It is a part of the issued share capital which has been subscribed by the public in case of a public limited company and includes shares purchased by the vendors.
4. Called up
It is the sum of total amount called on all shares comprised in the issued and subscribed capital. If the full value of the shares is called up on application then the subscribed capital and called up capital will be the same.

5. Paid up
This consists of the amount actually paid up or credited as paid up on the shares subscribed. Share premium received on issuance of shares are not considered in the paid up capital and hence, it is separately shown as share premium account in the reserves and surplus.

6. Uncalled
Uncalled capital is a part of the subscribed capital which has not been called up but it may be called up in future.

7. Reserved
It is that part of uncalled capital which company has decided to call on liquidation of the company and is termed as reserved capital.

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11 November 2013 PROCEDURE FOR ISSUE OF SHARES OF PUBLIC LIMITED COMPANY

The company can issue share in accordance with the provision of section 291, 292 and section 81 read with company’s article of association. There are following procedure or issuing and allotting shares:

1. After receiving share application money in bank account/cash, call a Board Meeting for issue and allot shares to the investor and for calling of general meeting for passing of resolution under section 81(1A) of the Companies Act, 1956.
2. Hold Board Meeting for issue of shares and approve the draft notice for general meeting;
3. Hold a General Meeting for issuing shares under section 81(1A) by passing special resolution;
4. File Form-23 with ROC with in 30 days from the date of passing of resolution;
5. Hold a Board Meeting for allotting shares to the Investor;
6. After issuing & allotting shares file Form-2 with ROC within 30 days from the date of allotment.
7. Issue shares certificate as per provisions of section 113 of the Companies Act, 1956.
8. Make entry in Minutes
9. Give the details of shareholders in Form-20B(Annual Return) with ROC annually with in 60 days from the date of AGM.

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11 November 2013
PROCEDURE FOR ISSUE OF SHARES OF PRIVATE LIMITED COMPANY

The company can issue share in accordance with the provision of section 291 and 292 read with company’s article of association. The provisions of section 81 is not applicable to private limited company. There are following procedure or issuing and allotting shares:

1. After receiving share application money in bank account/cash, call a Board Meeting for issue and allot shares to the investor.
2. Hold Board Meeting for issue and allot shares
3. After issuing & allotting shares file Form-2 with ROC within 30 days from the date of allotment.
4. Issue shares certificate as per provisions of section 113 of the Companies Act, 1956.
5. Make entry in Minutes
6. Give the details of shareholders in Form-20B(Annual Return) with ROC annually with in 60 days from the date of AGM.

Regards

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