PREVITAGE OF PRIVATE COMPANY

INTRODUCTION

A private company limited by shares is a class of private limited company

incorporated under the laws of England and Wales, Scotland, certain Commonwealth
countries or the Republic of Ireland. It has shareholders with limited liability and its shares
may not be offered to the general public, unlike those of a public limited company (plc).

"Limited by shares" means that the liability of the shareholders to creditors of the
company is limited to the capital originally invested, i.e. the nominal value of the shares and
any premium paid in return for the issue of the shares by the company. A shareholder's
personal assets are thus protected in the event of the company's insolvency, but any money
invested in the company may be lost.

A limited company may be "private" or "public". A private limited company's

disclosure requirements are lighter, but its shares may not be offered to the general public and
therefore cannot be traded on a public stock exchange. This is the major difference between a
private limited company and a public limited company. Most companies, particularly small
companies, are private.

Private companies limited by shares are usually required to have the suffix "Limited"
(often written "Ltd" or "Ltd.") or "Incorporated" ("Inc.") as part of their name, though the
latter cannot be used in the UK or the Republic of Ireland. In the Republic of Ireland
"Teoranta" ("Teo.") may be used instead, largely by Gaeltacht companies. "Cyfyngedig"
("Cyf.") may be used by Welsh companies in a similar fashion.

COMPANY OFFICERS

In the United Kingdom, every company must have formally appointed company
officers. By statute, a private company must have at least one director and until April 2008
also had to have a secretary. The company's articles of association may require more than one
director. At least one director must be an individual, not another company. Anybody can be a
director, subject to certain exceptions. A person who is yet to be discharged from bankruptcy
or who has been banned from being a company director by the court will be prohibited,
except in certain cases.
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 For example, if the bankrupted person had requested details of share transactions
because there was sufficient equity within the business/es that had not been dealt with
sufficiently by the court, they are technically not bankrupt and are permitted to start a
company. In addition, a person may not be a director of a limited company if he or she is
unable to consent to their appointment. As of October 2008, the minimum age required to
give this consent is 16 years of age. This change was applied retroactively, with any directors
under the age of 16 being removed from the register upon the implementation of the
(Companies Act 2006). This was already the case in Scotland, under the Age of Legal
Capacity (Scotland) Act 1991.

SHARE CAPITAL

When a limited company is formed it must issue one or more subscriber shares to its
initial members. It may increase capitalisation by issue of further shares. The issued share
capital of the company is the total number of shares existing in the company multiplied by the
nominal value of each share.

A company incorporated in England and Wales can be created with any number of
shares of any nominal value, expressed in any currency. For example, there may be 10,000
shares with a nominal value of 1p, or 100 shares of 1 each. In each case the share capital
would be 100. Unissued shares can be issued at any time by the directors using a Form
SH01 - Return of Allotment of Shares (Pursuant to Companies Act, 2006) subject to prior
authorisation by the shareholders.

Shares in a private company are usually transferred by private agreement between the
seller and the buyer, as they may not be offered to the general public. A stock transfer form is
required to register the transfer with the company. The articles of association of private
companies often place restrictions on the transfer of shares.

COMPANY ACCOUNTS

A company's first accounts must start on the day of incorporation. The first financial
year must end on the accounting reference date, or a date up to seven days either side of this
date.

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 Subsequent accounts start on the day following the year-end date of the previous
accounts. They end on the next accounting reference date or a date up to seven days either
side. To help companies meet this filing requirement, Companies House sends a pre-printed
"shuttle" form to its registered office several weeks before the anniversary of incorporation.
This will show the information that has already been given to Companies House..

REGISTERED OFFICE

Every company must have a registered office, which does not need to be its usual
business address. It is sometimes the address of the company's lawyers or accountants, for
example. All official letters and documentation from the government departments (including
Inland Revenue and Companies House) will be sent to this address, and it must be shown on
all official company documentation. The registered office can be anywhere in England and
Wales (or Scotland if the company is registered there).

REDUNDANT COMPANIES

Private companies that have not traded or otherwise carried on business for at least
three months may apply to the Registrar to be struck off the register. Alternatively, the
company may be voluntarily liquidated.

CONVERTING TO A PUBLIC LIMITED COMPANY

A private company limited by shares, or an unlimited company with a share capital,

may re-register as a public limited company (PLC). A private company must pass a special
resolution that it be so re-registered and deliver a copy of the resolution together with an
application form 43(3)(e) to the Registrar.

A private company is a company with private ownership. As a result, it does not need
to meet the Securities and Exchange Commission's (SEC) strict filing requirements for public
companies. Private companies may issue stock and have shareholders, but their shares do not
trade on public exchanges and are not issued through an initial public offering (IPO). In
general, the shares of these businesses are less liquid and the values are difficult to determine.

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EAKING DOWN 'PRIVATE COMPANY'

There are four main types of private companies: sole proprietorships, limited liability
corporations, S corporations or C corporations. All of these types of private companies have
different rules for shareholders, members and taxation.

Sole proprietorships put ownership of the company in the hands of one person. While
this gives the one owner total control over decisions, it also makes it harder to raise money.
Limited liability corporations often have multiple owners who share ownership and liability.
There are fewer documents required for opening this type of private company.

S Corporations and C corporations are similar to public companies with shareholders.

These private companies do not have to submit quarterly or annual financial reports. S
corporations can have no more than 100 shareholders. C corporations can have an unlimited
number of shareholders.

Remaining a private company can make raising money more difficult. Public
companies can often sell shares or raise money through bond offerings with more ease.
Private companies do have access to bank loans and certain types of equity funding,
depending on the type of corporation.

GOING PRIVATE

Going private is a transaction or a series of transactions that convert a publicly traded

company into a private entity. Once a company goes private, its shareholders are no longer
able to trade their stocks in the open market. Private equity firms will typically purchase a
struggling company, make it into a private entity, reorganize its capital structure, and issue
stocks once a profit can be realized.

A company typically goes private when its stakeholders decide that there are no
longer significant benefits to be garnered as a public company. Privatization will usually arise
either when a company's management wants to buy out the public shareholders and take the
company private (a management buyout), or when a company or individual makes a tender
offer to buy most or all of the company's stock. Going private transactions generally involve a
significant amount of debt. Companies are often taken private when they need time to
restructure their debt or operations prior to becoming a public corporation once again.

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CONCLUSION

Private equity is capital that is not noted on a public exchange. Private equity is
composed of funds and investors that directly invest in private companies, or that engage in
buyouts of public companies, resulting in the delisting of public equity. Institutional and retail
investors provide the capital for private equity, and the capital can be utilized to fund new
technology, make acquisitions, expand working capital, and to bolster and solidify a balance
sheet.

REFERENCES

http://www.investopedia.com/terms/p/privateequity.asp

https://www.kluwerlawonline.com/abstract.php?area=Journals&id=EULR2016001

http://www.mondaq.com/india/x/409358/Shareholders/Companies+Act+2013+Amen

ded+Private+Company+Exemptions+Reinstated

https://en.wikipedia.org/wiki/Private_company_limited_by_shares

https://en.wikipedia.org/wiki/Limited_company