Company Audit

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• A legal entity, allowed by legislation, which permits a group of people, as shareholders, to apply to the government for an independent organization to be created, which can then focus on pursuing set objectives, and empowered with legal rights which are usually only reserved for individuals, such as to sue and be sued, own property, hire employees or loan and borrow money.

• A voluntary association formed and organized to carry on a business. Types of companies include sole proprietorship, partnership, limited liability, corporation, and public limited company.

|Types of Companies |

1. "Private company" is defined in section 3(1)(iii) of the Act and it 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 (50) 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; and

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. 2. "Public company" is defined in section 3(1)(iv) of the Act and it means a company which —

a. is not a private company;

b. has a minimum paid-up capital of five lakh rupees or such higher paid-up capital, as may be prescribed;

c. is a private company which is a subsidiary of a company which is not a private company.

3. "Government company" is defined in section 617 of the Act and it means any company in which not less than fifty-one per cent of the paid-up share capital is held by the Central Government, or by any State Government or Governments, or partly by the Central Government and partly by one or more State Governments and includes a company which is a subsidiary of a Government company as thus defined. As provided by section 620(1) of the Act, the Central Government may, by notification in the Official Gazette, direct that any of the provisions of this Act (other than sections 618, 619 and 619A specified in the notifications:— a. Shall not apply to any Government company; or

Shall apply to any Government company, only with such exceptions, modifications and adaptations, as may be specified in the notification. 4. "Foreign company" is defined in section 591 of the Act and it means a company which

a. is incorporated outside India and

b. has established a place of business within India.

Within 30 days of establishment of such place of business within India, the Foreign Company is required to submit documents/details under section 592. Alterations and changes in these documents/details are required to be notified within 30 days.

5. "Company limited by guarantee" is defined in section 12(2)(b) of the Act and it means a company having the liability of its members limited by the memorandum to such amount as the members may respectively undertake by the memorandum to contribute to the assets of the company in the event of its being wound up. Such company could be a "company limited by guarantee and not having share capital" or a "company limited by guarantee and having a share capital".

The Memorandum and Articles of Association of such companies are...
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