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Companies limited by guarantee and having share capital

Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA LW Exams › Companies limited by guarantee and having share capital

  • This topic has 5 replies, 2 voices, and was last updated 1 year ago by MikeLittle.
Viewing 6 posts - 1 through 6 (of 6 total)
  • Author
    Posts
  • January 31, 2024 at 8:33 am #699388
    VikasK
    Participant
    • Topics: 98
    • Replies: 118
    • ☆☆☆

    Greetings Tutor, I Hope, you are doing well. Can you please help with the following.

    Giving a short background first, during my Graduation I had an opportunity to study The Indian Companies Act 2013, under which there is no prohibition on formation of Companies Limited by Guarantee and having Share Capital. However, as per CA 2006, Sec 5 (1) “A company cannot be formed as, or become, a company limited by guarantee with a Share Capital”.

    But when I looked at definition of a Public Company in Section 4 “Private and Public Companies” in the Act, it provides “A Public Company is a company limited by shares or limited by guarantee and having a share capital”

    So aren’t both the sections contradicting each other as in one part it provides that a Company limited by Guarantee with a Share Capital cannot be formed but same appears to be provided in the definition of a Public Company.

    January 31, 2024 at 3:14 pm #699412
    MikeLittle
    Keymaster
    • Topics: 27
    • Replies: 23319
    • ☆☆☆☆☆

    This section that you are referring to… is that from the Indian Companies Act? Because the English definition of a public company excludes companies limited by guarantee.

    As for your query, your reference states that a company cannot be created….

    But that surely means that it’s no longer possible to CREATE a company limited by guarantee and having a share capital

    But it WAS possible in the past so that type of company may still exist.

    Does that answer your query?

    February 9, 2024 at 3:12 pm #700003
    VikasK
    Participant
    • Topics: 98
    • Replies: 118
    • ☆☆☆

    Thank you Tutor. The section is was referring to is from Companies Act 2006, i just mentioned Indian Companies Act to highlight the difference between Company Law of 2 nations.

    February 9, 2024 at 7:02 pm #700011
    MikeLittle
    Keymaster
    • Topics: 27
    • Replies: 23319
    • ☆☆☆☆☆

    Vikas, I stand by my earlier answer, a company limited by guarantee cannot be a public company.

    February 9, 2024 at 7:49 pm #700018
    VikasK
    Participant
    • Topics: 98
    • Replies: 118
    • ☆☆☆

    Yes Tutor, i do agree with your answer. Companies Act 2006 states that “Provision to this effect has been in force—
    (a) in Great Britain since 22nd December 1980, and
    (b) in Northern Ireland since 1st July 1983.”.

    February 10, 2024 at 7:33 am #700034
    MikeLittle
    Keymaster
    • Topics: 27
    • Replies: 23319
    • ☆☆☆☆☆

    Well, there you go!

    OK?

  • Author
    Posts
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