COMPANY LAW PROJECT

TOPIC: PUBLIC COMPANY WITH REFERENCE TO ANY ONE COMPANY

SUBMITTED TO: SUBMITTED BY:

PROF. RAJINDER KAUR KRITIKA
FACULTY OF LAW BA LL.B (SECTION A)
UILS PANJAB UNIVERSITY 06/18
ACKNOWLEDGEMENT
I would like to express our sincere gratitude to Prof. Rajinder Kaur who bestowed upon
us this golden opportunity to prepare this erudite project titled “PUBLIC COMPANY
WITH SPECIAL REFERENCE TO ANY ONE COMPANY” under her aegis. As I
worked on this project, I got an opportunity to unearth various contours of the subject and
I got to understand the nuances of the topic. It led to lot of research and hence I was able
to gain extensive knowledge.
I would also like to extend thanks to my family and friends who backed me with more
strength and were constant pillars of support.

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Table of Contents
WHAT IS A COMPANY?............................................................................................................................3
TYPES OF COMPANIES.............................................................................................................................3
PUBLIC COMPANY....................................................................................................................................4
Characteristics of a Public Limited Company...........................................................................................4
1. No. of Members..............................................................................................................................4
2. Directors..........................................................................................................................................4
3. Appointment of Key Managerial Personnel Section 203 of the Companies Act, 2013 read with
Rule 8 mandates the appointment of Key Managerial Personnel..........................................................5
4. Quorum for Meetings [Section-103]...............................................................................................5
5. Constitution of Audit Committee Section 177(1) of the Companies Act, 2013 read with Rule 6
of the Companies (Meetings of the Board and its Powers) Rules, 2014,..............................................5
6. Nomination and Remuneration Committee and Stakeholders Relationship Committee[Section
178]........................................................................................................................................................5
7. Report on Annual General Meeting (Section 121).........................................................................6
8. Internal Audit [Section 138]............................................................................................................6
9. Secretarial Audit Report – Section 204 (1).....................................................................................6
10. Name clause.................................................................................................................................6
11. Transferability of Shares.............................................................................................................6
12. Financial Privacy.........................................................................................................................7
13. Life Span.....................................................................................................................................7
14. Issue of Securities........................................................................................................................7
Conversion of Public Company into Private Company.............................................................................8
DIFFERENCE BETWEEN PRIVATE AND PUBLIC COMPANY...........................................................8
EXAMPLE OF A PUBLIC COMPANY......................................................................................................9
NYKAA.....................................................................................................................................................9
Brief history of the Company................................................................................................................9
Nykaa IPO Details...............................................................................................................................10
Objects of the Issue..............................................................................................................................10
Nykaa IPO Shares Offered..................................................................................................................10
Nykaa IPO Subscription Status (Bidding Detail)................................................................................11

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WHAT IS A COMPANY?
The word ‘company’ is derived from the Latin word (Com = with or together; panis = bread), and it
originally referred to an association of persons who took their meals together. As per section 2(20) of the
CA, 2013 “company” means a company incorporated under this Act or under any previous company law.
Generally, a company may be defined as “an incorporated association which is an artificial person, having
a separate legal entity, with a perpetual succession, a common seal (if any), and a common capital
compromised of transferable shares and limited liability.” Company Legislation in India owes its origin to
the English Company Law.
Lord Justice Lindley has defined a company as “an association of many persons who contribute money or
money’s worth to a common stock and employ it in some trade or business and who share the profit and
loss arising therefrom. The common stock so contributed is denoted in money and is the capital of the
company. The persons who contributed in it or form it, or to whom it belongs, are members. The
proportion of capital to which each member is entitled is his “share”. The shares are always transferable
although the right to transfer them may be restricted.”

TYPES OF COMPANIES
The Companies Act 2013 provides for the kinds of companies that can be promoted and registered under
the Act. The three basic types of companies which may be registered under the Act are:
(a) Private Companies;
(b) Public Companies; and
(c) One Person Company (to be formed as Private Limited)

SECTION
2(71)

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PUBLIC COMPANY
A Public Limited Company registration in India is the best suitable business structure for entrepreneurs
who are planning for large-scale business operations. The rules and regulations are most stringent as
compared to the Private limited company. This is because the funds invested in the company also belong
to the public.

Characteristics of a Public Limited Company

1. No. of Members
Section 3(1) of the Companies Act, 2013 provides that a company may be formed for any lawful purpose
by seven or more persons, where the company to be formed is to be a public company; by subscribing
their names or his name to a memorandum and complying with the requirements of this Act in respect of
registration. There is no restriction with regard to the maximum number of members of a public company.

2. Directors
a) Section 149(1) of the Companies Act, 2013 requires that every company shall have a minimum
number of 3 directors in the case of a public company and there is no restriction on the
maximum number of directors

b) Further, Second proviso to Section 149(1) read Rule 3 of Companies (Appointment and
Qualification of Directors) Rules, 2014 following class of companies must have at least one
Women Director.
All Listed Companies Public companies
 with paid up capital of `100 crore or more or
 with turnover of `300 crore or more

c) Number of directorships [Section 165] - Maximum number of directorships, including any

alternate directorship, a person can hold is 20. A person cannot be a director of more than 10
public companies at the same time.

d) Retirement by Rotation [Section 152(6)]: Articles of the Company may provide the provisions
relating to retirement of the all directors. If there is no provision in the article, then not less than
2/3rds of the total number of directors of a public company shall be persons whose period of
office is liable to determination by retirement by rotation and eligible to be reappointed at annual
general meeting.

e) Independent Directors Section 149(4) - Every listed public company shall have at least one-third
of the total number of directors as independent directors. Any fraction contained in such one third
numbers shall be rounded off as one.

According to Rule 4 of Companies (Appointment and Qualification of Directors) Rules, 2014 the
following class or classes of companies are required to have at least two directors as independent
directors - (i) the Public Companies having paid up share capital of ten crore rupees or more; or
(ii) the Public Companies having turnover of one hundred crore rupees or more; or (iii) the Public
Companies which have, in aggregate, outstanding loans, debentures and deposits, exceeding fifty
crore rupees.

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 3. Appointment of Key Managerial Personnel Section 203 of the
Companies Act, 2013 read with Rule 8 mandates the appointment of
Key Managerial Personnel.

4. Quorum for Meetings [Section-103]

Quorum refers to the minimum number of members required to constitute a valid meeting. Following are
the minimum numbers provided in section 103, for various categories of companies. The quorum can be
increased by alteration of the articles of the company.

5. Constitution of Audit Committee Section 177(1) of the Companies Act,

2013 read with Rule 6 of the Companies (Meetings of the Board and its
Powers) Rules, 2014,
Provides that the Board of directors of following companies are required to constitute a Audit Committee
of the Board-
(i) Every listed Public companies;
(ii) All public companies with a paid up capital of 10 crore rupees or more;
(iii) All public companies having turnover of 100 crore rupees or more;
(iv) All public companies, having in aggregate, outstanding loans or borrowings or debentures or
deposits exceeding 50 crore rupees or more.

6. Nomination and Remuneration Committee and Stakeholders

Relationship Committee [Section 178]
The Nomination and Remuneration Committee helps the Board of Directors in the preparations relating to
the election of members of the Board of Directors, and in handling matters within its scope of
responsibility that relate to the conditions of employment and remuneration of senior management, and to
management’s and personnel’s remuneration and incentive schemes. The Board of directors of following
companies shall constitute Nomination and Remuneration Committee of the Board:
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(a) Every listed Companies; or
(b) The following class of companies –
(i) all public companies with a paid up capital of ten crore rupees or more;
(ii) all public companies having turnover of one hundred crore rupees or more;
(iii) all public companies, having in aggregate, outstanding loans or borrowings or debentures or deposits
exceeding fifty crore rupees or more.

7. Report on Annual General Meeting (Section 121)

Section 121 of the Companies Act, 2013 provides the preparation of report on each annual general
meeting which is to be filed with the registrar. Every listed public company is required to prepare a report
on each annual general meeting including the confirmation to the effect that the meeting was convened,
held and conducted as per the provisions of the Act and the rules made thereunder.

8. Internal Audit [Section 138]

The following class of companies shall be required to appoint an internal auditor which may be either an
individual or a partnership firm or a body corporate:-

9. Secretarial Audit Report – Section 204 (1)

Secretarial Audit is a process to check compliances made by the Company under Corporate Law & other
laws, rules, regulations, procedures etc. It is a mechanism to monitor compliance with the requirements of
stated laws and processes.
The applicability of the Secretarial Audit is on the bigger Companies as per the Section 204(1) of the
Companies Act, 2013 read with Rule 9 of the Companies (Appointment and Remuneration of Managerial
Personnel) Rules, 2014:
 Every listed company;
 For public company: having a paid-up share capital of fifty crore rupees or more; or having a
turnover of two hundred fifty crore rupees or more.
 Every company having outstanding loans or borrowings from banks or public financial institutions
of one hundred crore rupees or more.

10. Name clause

As per Section 4(1), the memorandum of a limited company must state the name of the company with
“Limited” as its last word in the case of a public company;
The name of the company can be altered by a special resolution and with the approval of the Central
Government in writing. Approval of the Central Government is not required , in case where the the
change in the name of the company relates to the addition/deletion of the word ‘Private’ to the name of

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the company consequent to the conversion of a company into a public company and vice versa. [Section
13 (2)]

11. Transferability of Shares

Section 44 of the Companies Act, 2013 provides that the shares held by the members are movable
property and can be transferred from one person to another in the manner provided by the articles. If the
articles do not provide anything for the transfer of shares and the Regulations contained in Table “F” in
Schedule I to the Companies Act, 2013, are also expressly excluded, the transfer of shares will be
governed by the general law relating to transfer of movable property. A member may sell his shares in the
open market and realise the money invested by him. This provides liquidity to a member (as he can freely
sell his shares) and ensures stability to the company (as the member is not withdrawing his money from
the company). The Stock Exchanges provide adequate facilities for the sale and purchase of shares.Only
shares of a public company are capable of being listed on a stock exchange.
As per section 58(2), the securities or other interest of any member in a public company shall be freely
transferable. Proviso to section 58(2) provides that any contract or arrangement between two or more
persons in respect of transfer of securities shall be enforceable as a contract.
The concept of free transferability of shares in public and private companies is very succinctly discussed
in the case of Western Maharashtra Development Corpn. Ltd. V. Bajaj Auto Ltd [2010] 154 Com Cases
593 (Bom), it was held that the Companies Act, makes a clear distinction in regard to the transferability
of shares relating to private and public companies. By definition, a “private company” is a company
which restricts the right to transfer its shares. In the case of a public company, the Act provides that
the shares or debentures and any interest therein, of a company, shall be freely transferable. The
provision contained in the law for the free transferability of shares in a public company is founded on the
principle that members of the public must have the freedom to purchase and, every shareholder the
freedom to transfer.

12. Financial Privacy

Public limited companies are strictly regulated and are required by law to publish their complete financial
statements annually. This ensures that they reveal their true financial position to their owners and to
potential investors so that they can determine the true worth of its shares

13. Life Span

A public limited company is not affected by death of one of its shareholders, but the shares are transferred
to the next kin or legal heir of such deceased shareholder and the company continues to run its business as
usual. In the case of a director’s death, the Board is empowered to fill the resulting casual vacancy may be
filled by Board of Directors at Board meeting which shall be subsequently approved by members in the
immediate next general meeting. [Section 161(4)]

14. Issue of Securities

Section 23 of the Companies Act, 2013 provides that a company whether public or private may issue
securities. A public company may issue securities:
(a) to public through prospectus ("public offer") by complying with the provisions of Part I of
Chapter III of the Act; (a prospectus is an invitation issued to the public to offer for
purchase/subscribe any securities of the company. A document is deemed to be issued to the
public, if the invitation to subscribe for share capital is such as to be open to any one who brings
his money and applies in prescribed form, whether the prospectus was addressed to him or not.
The test is not who receives the document, but who can apply for the securities in response to the
invitation contained in it.) or

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 (b) through private placement by complying with the provisions of Part II of Chapter III of the Act;
(c) through a rights issue or a bonus issue in accordance with the provisions of this Act and in case of
a listed company or a company which intends to get its securities listed also with the provisions of
the SEBI Act, 1992 and the rules and regulations made thereunder.
Dematerialisation of Securities-mandatory - Section 29(1) states that notwithstanding anything contained
in any other provisions of this Act,— (a) every company making public offer; and (b) such other class or
classes of public companies as may be prescribed, shall issue the securities only in dematerialised form by
complying with the provisions of the Depositories Act, 1996 and the regulations made thereunder.
Rule 9 of Companies (Prospectus and Allotment of Securities) Rules, 2014, states that the promoters of
every public company making a public offer of any convertible securities may hold such securities only in
dematerialised form.

Conversion of Public Company into Private Company

Companies Act 2013 provides for conversion of public companies to private companies vice versa,
conversion of one person company into public/private Company, conversion of Section 8 companies
(companies for charitable purpose) into any other class of companies.
Section 14 (1) states that subject to the provisions of this Act and the conditions contained in its
memorandum, if any, a company may, by a special resolution, alter its articles including alterations
having the effect of conversion of— (a) a private company into a public company; or (b) a public
company into a private company:
Private Company ceases to be private company on alteration of articles removing the restrictions required
under Section 2(68) [Proviso to Section 14(1)] When a company being a private company alters its
articles in such a manner that they no longer include any of the three restrictions and limitations which are
required to be included in the articles of a private company under section 2(68), the company shall, as
from the date of such alteration, cease to be a private company. It also ceases to have the privileges and
exemptions conferred on it by the Act as a private company. It becomes a public company and all the
provisions of the Act applicable to such companies become applicable to it. The company shall
accordingly change its name and no approval of Central Government is required for the name change as
per the proviso to section 13(2). Time limit (days) for filing the conversion of private company into
public company application in e-Form INC-27 with the registrar along with prescribed fees
is 15 days from the date of passing the special resolution.

DIFFERENCE BETWEEN PRIVATE AND PUBLIC COMPANY

Sr. Section Brief Description Private Limited Public Limited Company
No Company

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 1. 2 Meaning Right to transfer Subsidiary of a Public Co. is
the shares: deemed to be a public Co
Restricted
2. 3 Minimum Members Required 2 (Two), 7 (Seven)
Maximum 200
(Two Hundred)
3. 4 Name of the Company Private Limited” as “Public Limited” as Last Word
Last Word
4. 5 Provision of To be agreed and To be agreed and approved
entrenchment in the approved by all through a Special Resolution
Articles members

5 23 Issue of Securities By way of rights To public through (“Public

issue or bonus Offer”) By way of rights issue or
issue through Bonus issue through private
private placement placement
6 29 Public Offer to be in Not Applicable In case of Public Offer of
dematerialised form securities, the securities have to be
in dematerialised form
7 40 Securities in Public Not Applicable Securities offered in public have
Offer to be Listed in to be listed in recognised Stock
Stock Exchanges Exchanges
8 73 Acceptance of Not applicable Allowed if paid up capital Rs.
deposits 1000 Crore or more or turnover
over Rs. 500 Crore or more
9 197 Restriction on No Restriction Restricted to 11% of Net profit or
Managerial at least Rs. 30 Lakhs p.a
Remuneration depending upon paid up capital
10 134(3)(p) Annual Evaluation in Not applicable In case of a listed company and
the Board’s Report every other public company
having such paid-up share capital
as may be prescribed, a statement
indicating the manner in which
formal annual evaluation of the
performance of the Board, its
Committees and of individual
directors has been made

EXAMPLE OF A PUBLIC COMPANY

NYKAA
(FSN E- COMMERCE VENTURES LIMITED)
Nykaa is a consumer technology platform, delivering a content-led, lifestyle retail experience to
consumers. The company has a diverse portfolio of beauty, personal care, and fashion products, including
their own brand products manufactured by them. The different consumer journeys exist in two business
verticals, Nykaa- Beauty and personal care and Nykaa fashion – Apparel and accessories.

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Brief history of the Company
The Company was incorporated on April 24, 2012 as ‘FSN E-Commerce Ventures Private Limited’ under
the Companies Act, 1956, pursuant to a certificate of incorporation dated April 24, 2012, issued by the
RoC. Subsequently, pursuant to a resolution of the Board dated July 15, 2021 and a resolution of
Shareholders dated July 16, 2021, it was converted from a private company to a public company and
consequently, its name was changed from ‘FSN E-Commerce Ventures Private Limited’ to ‘FSN E-
Commerce Ventures Limited’, and a fresh certificate of incorporation under the Companies Act, 2013
was issued upon a change in name by the RoC on July 28, 202

Nykaa IPO Details

Nykaa IPO Date Oct 28, 2021 to Nov 1, 2021

Nykaa IPO Face

₹1 per share
Value

Nykaa IPO Price ₹1085 to ₹1125 per share

12 Shares
A retail-individual investor could apply for up to 14 lots (168 shares or ₹189,000).
Nykaa IPO Lot Application Lots Shares Amount
Size
Minimum 1 12 ₹13,500

Maximum 14 168 ₹189,000

Issue Size ₹5,351.92 Cr

Fresh Issue ₹630.00 Cr

41,972,660 shares of ₹1
Offer for Sale
(aggregating up to ₹4,721.92 Cr)

Employee
100
Discount

Issue Type Book Built Issue IPO

Listing At BSE, NSE

Company Falguni Nayar, Sanjay Nayar, Falguni Nayar Family Trust And Sanjay Nayar Family
Promoters Trust are the company promoters.

Objects of the Issue

• Investment of ₹ 420 million in certain of their subsidiaries, namely, FSN Brands and / or Nykaa
Fashion for funding the set-up of new retail stores;
• ₹ 420 million towards capital expenditure to be incurred by the company and investment in
certain of their subsidiaries, namely, Nykaa E-Retail, Nykaa Fashion and FSN Brands for funding the set-
up of new warehouses;

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• ₹ 1,560 million towards repayment or prepayment, of
outstanding borrowings availed by the company and one of
their subsidiaries, namely, Nykaa E-Retail;
• Expenditure of ₹ 2,340 million to acquire and retain
customers by enhancing the visibility and awareness of the
brands;
Shareholding Pattern
1.1
5.98
Nykaa IPO Shares Offered 2

Nykaa IPO was a public issue of 26,485,479 equity shares

Category Shares Offered Amount (Rs Cr) Size (%)

QIB 14,352,511 1,614.66 54.19% 52.43

38.48
NII 7,129,781 802.10 26.92%

Retail 4,753,187 534.73 17.95%

Employe
250,000 28.13 0.94% Promoter Public
e
FII Mutual funds
Total 26,485,479 2,979.62 100% Others

Nykaa IPO Subscription Status (Bidding

Detail)
The Nykaa IPO is subscribed 81.78 times on Nov 1, 2021. The company's shares were listed at Rs
Category Subscription (times) 2,001 on a hefty premium of 77.87 per
cent over its issue price of Rs 1,125.
QIB 91.18 On NSE, the scrip was listed at Rs
2018, a premium of 79.38 per cent.
NII 112.02 Nykaa IPO received bids of over
Retail 12.24 216.59 crore shares against the total
issue size of over 2.64 crore shares,
Employee 1.88 data available with the National Stock
Exchange (NSE) showed
Total 81.78

Chart Title
120
100 100 100
100
80
60 52.56 52.56 52.53
40
20
0 0 0
0
November 8, 2021 Decmber 2021 Mar-22

Holding (%) Pledges as% of promoter shares

Pledges as % of promoter shares (%)
Locked as % of promoter shares %

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BIBLIOGRAPHY
1. Company Law, N.V Paranjape, Central Law Agency, Allahabad,2006
2. Company Law, Avtar Singh, Eastern book Company, New Delhi, 2019
3. The Institute of Company secretaries of India
https://www.icsi.edu/media/webmodules/publications/FinalCLStudy.pdf
4. Public company- Overview and Incorporation Process https://taxguru.in/company-law/public-
company-overview-incorporation-process.html#:~:text=Meaning%20of%20Public%20Company,-
As%20per%20Section&text=Provided%20that%20a%20company%20which,private%20company
%20in%20its%20articles.
5. Public limited Company https://cleartax.in/s/public-limited-company-india
6. Company Law https://web.sol.du.ac.in/my_modules/type/cbcs-41-3/data/root/B.Com/Semester
%203/Core%20Course/Company%20Law/Unit%201.pdf
7. Comparison between private and Public Limited Company
https://taxguru.in/company-law/comparison-private-public-limited-company-companies-act-
2013.html
8. FSN e Commerce Ventures Ltd.
https://trendlyne.com/equity/share-holding/705188/NYKAA/latest/fsn-e-commerce-ventures-ltd/
9. Nykaa IPO https://www.indiainfoline.com/fsnecommerceventureslimited-ipo/assets/img/IPO-
Nykaa.pdf
10. https://www.icsi.edu/media/webmodules/23112021_Company_Law.pdf
11. BAREACT – The Companies Act,2013

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