Dear Prakash,
As per Section 2(23), a "limited (liability) company" means a company limited by shares or by guarantee. The liability of the members, in the case of a limited company may be limited with reference to the nominal value of the shares, respectively held by them or to the amount which they have respectively guaranteed to contribute in the event of winding up of the company. Accordingly, a limited liability company can be further classified into :
(a) company limited by shares (Private limited company & Public limited company)
(b) Company limited by guarantee
Companies with limited liability exist in business law worldwide. However, besides India, the term “ limited liability” is used in UK, Ireland, Taiwan, Australia, China, Japan, New Zealand, Hong Kong, Singapore etc.
By virtue of Section 3(1)(iii), a “private limited company means a company which has a minimum paid-up capital of one lakh rupees or such higher paid-up capital as may be prescribed, and 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 ;
Provided that where two or more persons hold one or more shares in a company jointly, they shall, for the purposes of this definition, be treated as a single member."
Regards,
Veeral Gandhi
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