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Pvt. company can be become another pvt.company shareholder

CA rohit swami (CHARTERED ACCOUNTANT) (262 Points)

23 April 2013

ANY ONE TELL ME THAT PVT. LTD. COMPNY CAN BECOME AN SHAREHOLDER OF ANOTHER PVT.LTD. COMAPNY.........IS IT NOT HIT U/S 3 OF COMPANIES ACT.THAT PVT. LTD COMPANY CAN ALLOT SHARE ONLY TO MEMBERS,DIRECTORES OR THEIR RELATIVES ONLY

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4 Replies

CA Kedar Sakhardande (Proprietor) (942 Points)
Replied 23 April 2013

Member includes Pvt Ltd Co

1 Like

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Sneha (Company Secretary) (1594 Points)
Replied 23 April 2013

Yes, pvt co/public co can become shareholder of another pvt company.

1 Like

(Guest)

(iii) "private company" 1[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 is 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

2[(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

There is no restriction in alloting the shares . But check the article also whether threr is any restrictions or not.

1 Like

Sanjeev Kumar (CEO KPS Corporate Consultants P LTD ) (99 Points)
Replied 29 October 2013

a private limited company is a separate legal entity which is capable of purchasing property in its name, can acquire shares as a matter of right. Articles of association of the company can not restrict a private limited as a general rule.