Private Company - Definition - Law Dictionary Home Dictionary Definition private-company

Definition :

Private company. A 'private company' is defined by s. 26 of the (English) Companies Act, 1929, as follows:-

Company privately formed by members who subscribe the whole of the capital among them-selves.

26. --(1), For the purposes of this Act the expression 'private company' means a company which by its articles-

(a) restricts the right to transfer its shares; and

(b) limits the number of its members to 50, not including persons who are in the employment of the company and persons who, having been formerly in the employment of the company, were, while in that employment and have continued after the determination of such employment to be, members of the company; and

(c) prohibits any invitation to the public to subscribe for any shares or debentures of the company.

(2) 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.

S. 27, ibid., provides that if a company alters its articles so that the provisions of s. 26 for the constitution of a private company are not included, the company ceases upon such alteration to be a private company and must deliver to the registrar of companies a prospectus or statement in lieu of prospectus (see those titles) within fourteen days, and if the company makes default in complying with those provisions, although contained in its Articles, the same s. (27) withdraws the privileges and exemptions of private companies to be found in, e.g., s. 40 (statement in lieu of prospectus and allotment of shares), s. 94 (commencement of business), s. 139 (number of directors), or s. 113 (statutory meeting and report), which do not apply to private companies.