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Private Company

section, companies and shares

PRIVATE COMPANY. A private com pany may consist of any two or more persons, with limited or unlimited liability. (See MEMORANDUM OF ASSOCIATION.) The Companies (Consolidation) Act, 1908, Section 121, defines a private company as follows (1) For the purposes of this Act the expression ' private company ' means a company by which its articles " (a) restricts the right to transfer its shares ; and " (b) limits the number of its mem bers (exclusive of persons who are in the employment of the company) to fifty ; and " (c) prohibits any invitation to the public to subscribe for any shares or debentures of the company.

" (2) A private company may, subject to anything contained in the memor randuna or articles, by passing a special resolution and by filing with the registrar of companies such a statement in lieu of prospectus as the company, if a public company, would have had to file before allot ting any of its shares or debentures, together with such a statutory declaration as the company, if a public company, would have had to file before commencing business, turn itself into a public company.

" (3) Where two or more persons hold one or more shares in a company jointly they shall, for the purposes of this Section, be treated as a single member." If at any time the number of members is reduced below two and the private company carries on business for more than six months while the number is so reduced, the person carrying on the business shall be liable for the payment of the whole debts of the company contracted during that time.

The regulations in Section 65 as to sending a copy of the statutory report to the mem bers of a company and filing a copy with the registrar do not apply to a private company. (See MEETINGS.) Section 26, s.s. 3, excepts a private company from sending an annual balance sheet to the registrar. (See REGISTER OF MEMBERS OF COMPANY.) Section 82, which obliges companies to file a statement with the registrar where no prospectus is issued, does not apply to a private company. (See PROSPECTUS.) (See COMPANIES.)