Incorporated Companies
The companies act no 7 of 2007 shall apply , to all incorporated companies in sri lanka
Definition of Incorporated companies
" It is an incorporated or unlimited liability institute having registered under the companies act and function to the provisions of same being treated as a person before the law "
Classifications of companies
Companies
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Limited Companies Unlimited Companies
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Companies limited Companies limited
by guarantee By shares
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Limited Public Limited Private Limited off shore
Companies Companies Companies
Types of Companies
In terms of companies Act no 07 of 2007 , the companies are mainly of three forms
1. Limited Companies
It is company where the liability of the share holders is limited only up to the quantity specified in the Articles of Association , based on the number of shares subscribed by them
2. Unlimited Companies
the liability of the share holders of these companies is not limited to the number of shares held as specified in the Articles . In addition, they are bound for the settlement of the companies liabilities without any limit.
3. Companies Limited by Guarantee
These companies do not issue shares and in case of settlement of company's debts or liabilities without any limit.
Features of company limited by Guarantee
- Bind up to the value of fixed Guarantee as shown in the Article , in case of settlement of debts of liabilities
- Does not issue shares
- There should be an Article of Association which specifically states the following
1. Objective of the company
2. In the event of winding up of the company the amount each member should contribute to the assets for the settlement of liabilities should be indicated.
- It is possible to register as a " Company limited by guarantee " without inserting the word "Limited " to the company name.
Private Limited Company
A Private Limited Company should be interpreted as an incorporated organization which cannot sell in public using a corporate statement its shares or securities to the public , where the maximum number of shareholders is limited to 50 and liability is limited , which has a legal personality and it has to be registered under the companies act .
Features of a private limited company
- Maximum of share holders is limited to 50
- Shares or other securities cannot be issued ti the public
- Should be subjected ti statutory control to the share holders control as well
- The management of all the activities should be by a board of directors
- Liability is Limited
- Has a legal personality
- Minimum number of directors is 01. no limit regarding the maximum
- Could refrain from following certain provisions of the company act on a written unanimous consent of the share holders
- It is compulsory to maintain Accounts
- When mentioning the name of the company . the word " Private Limited " should be stated .
- Shares cannot be transferred without the consent of other shares holders .
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