Investing in a pvt ltd company.

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Amit Subodh (Querist)
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25 August 2012 what are the terms of investing in a pvt ltd company? how can he get advantage without being allotted shares worth the investment?

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Guest (Expert)

25 August 2012
As per section 3 (i) (iii)

"private company" means a company which has a minimum paid-up capital of one lakh rupees and which by its articles,

(a) restricts the right to transfer its shares, if any;

(b) limits the number of its members to fifty not including-

(i) persons who are in the employment of the company, and

(ii) 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; and

(c) prohibits any invitation to the public to subscribe for any shares in, or debentures of, the company;

d) prohibits any invitation or acceptance of deposits from persons other than its members, directors or their relatives

Hence, You have to be either director, relative of director or shareholder for investing in a private limited company.

Even a shareholder holding 1 share can invest in a private limited company.

There are no other terms of investing in a private limited company.

Amit Subodh

Amit Subodh (Querist)
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25 August 2012 Thanks Neha,
I want to know if a person is investing an amount say 5 lakh in a company which is having an authorized capital of 1 lakh, and company directors agrees to give him 25 % shares with a place in board of director.but those 25% shares worth 25000 only. then how that 475000 is treated. I heard about unsecured liabilities. please tell me about the options and procedure

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Amit Subodh

Amit Subodh (Querist)
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