Question

Study the following case/situation and express your opinion.

Two promoters got ‘Super Drinks Pvt. Ltd.’ incorporated on 18th Jan, 2018. The company has 100 members as on 31st Mar, 2019.

a) What is the maximum number of members this company can have?

b) Can this company invite the general public to subscribe for shares?

c) Can the shareholders of the company sell its shares to outsiders?

Answer 1

(a) Super Drinks Private Ltd. company is a private company. As per the new provisions made in the Companies Act, 2013, the maximum number of members increased to 200. Hence this company can have a maximum of 200 members. Earlier the maximum number of members allowed in Private Company was 50.

(b) Super Drinks Private Ltd. company is a private company. Hence this company cannot invite the general public to subscribe for shares.

(c) Super Drinks Private Limited Company cannot sell its shares to the members of the public. However, shares and debentures of a private company are generally allotted and sold to the family members, close relatives, and friends. It does not invite the members of the public to subscribe to its shares and debentures. It collects its capital through private arrangements.