{"id":13530,"date":"2018-08-21T06:56:55","date_gmt":"2018-08-21T06:56:55","guid":{"rendered":"https:\/\/www.legalraasta.com\/blog\/?p=13530"},"modified":"2026-04-07T17:17:45","modified_gmt":"2026-04-07T11:47:45","slug":"what-is-companies-act-section-2-68","status":"publish","type":"post","link":"https:\/\/www.legalraasta.com\/blog\/what-is-companies-act-section-2-68\/","title":{"rendered":"What is Companies Act Section 2(68)"},"content":{"rendered":"<div id=\"ez-toc-container\" class=\"ez-toc-v2_0_73 counter-hierarchy ez-toc-counter ez-toc-grey ez-toc-container-direction\">\n<div class=\"ez-toc-title-container\">\n<p class=\"ez-toc-title\" style=\"cursor:inherit\">Contents<\/p>\n<span class=\"ez-toc-title-toggle\"><a href=\"#\" class=\"ez-toc-pull-right ez-toc-btn ez-toc-btn-xs ez-toc-btn-default ez-toc-toggle\" aria-label=\"Toggle Table of Content\"><span class=\"ez-toc-js-icon-con\"><span class=\"\"><span class=\"eztoc-hide\" style=\"display:none;\">Toggle<\/span><span class=\"ez-toc-icon-toggle-span\"><svg style=\"fill: #999;color:#999\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" class=\"list-377408\" width=\"20px\" height=\"20px\" viewBox=\"0 0 24 24\" fill=\"none\"><path d=\"M6 6H4v2h2V6zm14 0H8v2h12V6zM4 11h2v2H4v-2zm16 0H8v2h12v-2zM4 16h2v2H4v-2zm16 0H8v2h12v-2z\" fill=\"currentColor\"><\/path><\/svg><svg style=\"fill: #999;color:#999\" class=\"arrow-unsorted-368013\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" width=\"10px\" height=\"10px\" viewBox=\"0 0 24 24\" version=\"1.2\" baseProfile=\"tiny\"><path d=\"M18.2 9.3l-6.2-6.3-6.2 6.3c-.2.2-.3.4-.3.7s.1.5.3.7c.2.2.4.3.7.3h11c.3 0 .5-.1.7-.3.2-.2.3-.5.3-.7s-.1-.5-.3-.7zM5.8 14.7l6.2 6.3 6.2-6.3c.2-.2.3-.5.3-.7s-.1-.5-.3-.7c-.2-.2-.4-.3-.7-.3h-11c-.3 0-.5.1-.7.3-.2.2-.3.5-.3.7s.1.5.3.7z\"\/><\/svg><\/span><\/span><\/span><\/a><\/span><\/div>\n<nav><ul class='ez-toc-list ez-toc-list-level-1 ' ><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-1\" href=\"https:\/\/www.legalraasta.com\/blog\/what-is-companies-act-section-2-68\/#INTRODUCTION\" title=\"INTRODUCTION\">INTRODUCTION<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-2\" href=\"https:\/\/www.legalraasta.com\/blog\/what-is-companies-act-section-2-68\/#What_Characteristics_does_a_Private_limited_company_hold_under_Companies_Act_Section_268\" title=\"What Characteristics does a Private limited company hold under Companies Act Section 2(68)\">What Characteristics does a Private limited company hold under Companies Act Section 2(68)<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-3\" href=\"https:\/\/www.legalraasta.com\/blog\/what-is-companies-act-section-2-68\/#What_are_the_Advantages_of_a_private_limited_company_under_Companies_Act_Section_268\" title=\"What are the Advantages of a private limited company under Companies Act Section 2(68)\">What are the Advantages of a private limited company under Companies Act Section 2(68)<\/a><\/li><\/ul><\/nav><\/div>\n<h2 style=\"text-align: center;\"><span class=\"ez-toc-section\" id=\"INTRODUCTION\"><\/span>INTRODUCTION<span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p><a href=\"https:\/\/www.legalraasta.com\/companies-act-2013\/\" target=\"_blank\" rel=\"noopener noreferrer\">Companies Act<\/a> Section 2(68) states that a company with the minimum paid-up share capital of one lakh rupees or higher as may be prescribed, is said to be a <a href=\"https:\/\/www.legalraasta.com\/private-limited-company-registration\/\" target=\"_blank\" rel=\"noopener noreferrer\">Private Company<\/a>. It provides that:<\/p>\n<ul>\n<li>there is a restriction in transferring its shares<\/li>\n<li>its members are limited to two hundred, except in <a href=\"https:\/\/www.legalraasta.com\/opc-registration\/\" target=\"_blank\" rel=\"noopener noreferrer\">One Person Company<\/a><\/li>\n<li>prohibits any invitation to the public to subscribe for any securities of the company.<\/li>\n<\/ul>\n<p>It has been provided in section 2(68) of the companies act that if two or more persons are holding one or more shares in a company then they shall be treated as a single member, for the purpose of this clause. Besides, persons who are in the employment of the company and\u00a0persons who were former members of the company and continued in that employment and have continued to be members after the employment ceased\u00a0shall not be included in the number of members. Whereas, maximum and minimum number of<a href=\"https:\/\/www.legalraasta.com\/types-of-directors\/\" target=\"_blank\" rel=\"noopener noreferrer\"> Director<\/a> in a <a href=\"https:\/\/www.legalraasta.com\/one-person-company\/\" target=\"_blank\" rel=\"noopener noreferrer\">One Person Company<\/a> is 1.<\/p>\n<h2><span class=\"ez-toc-section\" id=\"What_Characteristics_does_a_Private_limited_company_hold_under_Companies_Act_Section_268\"><\/span><strong>What Characteristics does a Private limited company hold under Companies Act Section 2(68)<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p>A <a href=\"http:\/\/companyregistrationonline.in\/private-limited-company-registration\" target=\"_blank\" rel=\"noopener noreferrer\">private limited company<\/a> is similar to a <a href=\"https:\/\/www.legalraasta.com\/blog\/importance-small-businesses-india\/\" target=\"_blank\" rel=\"noopener noreferrer\">small scale business<\/a>. Following are the meetings that must be held timely:<\/p>\n<div class=\"table-1\">\n<table style=\"height: 107px;\" width=\"827\">\n<thead>\n<tr>\n<th align=\"left\">Minimum share capital (in rupees)<\/th>\n<th align=\"left\">Minimum Directors<\/th>\n<th align=\"left\">Liability<\/th>\n<\/tr>\n<\/thead>\n<tbody>\n<tr>\n<td align=\"left\">\u00a0 1 Lakh<\/td>\n<td align=\"left\">\u00a0Two<\/td>\n<td align=\"left\">\u00a0Limited to its shares<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<\/div>\n<ul>\n<li>In private limited companies, Board meeting shall be held four times in a year with a maximum gap of 120 days between two meetings except for the <a href=\"https:\/\/www.legalraasta.com\/small-company\/\" target=\"_blank\" rel=\"noopener noreferrer\">small companies<\/a> ( they are required to meet once in each half year).<\/li>\n<li>The general meeting should be held once in a financial year ( within 6 months\u00a0from\u00a0the date\u00a0of the closing of\u00a0the relevant\u00a0financial year and not more than 15 months should elapse between 2 AGMs).<\/li>\n<\/ul>\n<h2><span class=\"ez-toc-section\" id=\"What_are_the_Advantages_of_a_private_limited_company_under_Companies_Act_Section_268\"><\/span><strong>What are the Advantages of a private limited company under Companies Act Section 2(68)<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h2>\n<ol>\n<li><strong>Separate legal entity: <\/strong>Entity means anything which has a real existence. Under the Companies Act Section 2(68), a Company is a legal entity and a juristic person who is an artificial person. Overall the company has the legal capacity to own property and also incur debts.\u00a0The members and the shareholders of the company are free from the liability to the creditors for such debts.<\/li>\n<li><strong>Uninterrupted existence:\u00a0<\/strong>A company hold \u2018perpetual succession\u2019 which means continuity or uninterrupted existence until it is dissolved legally. A company will not be\u00a0affected by the death of the member or other departure of any member as it is a separate legal entity but its existence will continue no matter what changes in the membership.<\/li>\n<li><strong>Limited Liability:\u00a0<a href=\"https:\/\/www.legalraasta.com\/limited-liability-partnership\/\" target=\"_blank\" rel=\"noopener noreferrer\">Limited Liability <\/a><\/strong>means the status of being legally responsible only to a limited amount of debts of a company. To the extent of the face value of shares taken up by members, the liability of a company is limited. The liability of the members on a winding-up is limited to the amount unpaid on their shares, where a company is limited by shares.<\/li>\n<li><strong>Free &amp; Easy transferability of shares:\u00a0<\/strong>shares are transferable by a shareholder to any other person. The transfer is easy in comparison with the transfer of an interest in a business run as a proprietary concern or a partnership. A share certificate is needed along with the filing and signing a share transfer form and handing over the buyer of the shares.<\/li>\n<li><strong>Owning Property:<\/strong>\u00a0A company can acquire property in its own name. Shareholders can not make any claim upon the property of the company so long as the company is a going concern. The shareholders are not the owners of the property of a company. The company itself is the true owner.<\/li>\n<li><strong>Capacity to sue and be sued:\u00a0<\/strong>To sue means to institute legal proceedings against or to bring a suit in a court of law. As a person, it can bring a legal action in his\/her own name against another in that person\u2019s name, a company being an independent legal entity can sue and also be sued in its own name.<\/li>\n<li><strong>Dual Relationship:\u00a0\u00a0<\/strong>it is possible for a company to make a valid and effective contract with any of its members in the company form of organization. It is also possible for a person to be in control of a company and at the same time be in its employment. Therefore, a person can at the same time be a shareholder, creditor, <a href=\"https:\/\/www.legalraasta.com\/types-of-directors\/\" target=\"_blank\" rel=\"noopener noreferrer\">director<\/a> and also an employee of the company.<\/li>\n<li><strong>Borrowing Capacity:<\/strong>\u00a0A company can enjoy better avenues for the borrowing of funds. It can issue secured debentures as well as unsecured debentures and can also accept deposits from the public, etc. Render Large financial assistance is preferable by banking and financial institutions than <a href=\"https:\/\/www.legalraasta.com\/partnership-registration\/\" target=\"_blank\" rel=\"noopener noreferrer\">partnership firms <\/a>or proprietary concerns.<\/li>\n<\/ol>\n<p>&nbsp;<\/p>\n<p>For further information regarding\u00a0<a href=\"https:\/\/www.legalraasta.com\/private-limited-company-registration\/\" target=\"_blank\" rel=\"noopener noreferrer\">Private limited company registration<\/a>, you can visit our website:<a href=\"https:\/\/www.legalraasta.com\/\" target=\"_blank\" rel=\"noopener noreferrer\"> Legal Raasta<\/a> or Ring us on <a href=\"tel:+918750048585\">+918750048585<\/a>\u00a0 for your queries and you can contact.<\/p>\n<blockquote>\n<p>Related Articles:<\/p>\n<p><a href=\"https:\/\/www.legalraasta.com\/blog\/audit-private-limited-company\/\" target=\"_blank\" rel=\"noopener noreferrer\"><span data-sheets-value=\"{&quot;1&quot;:2,&quot;2&quot;:&quot;Audit Requirements for Private Limited Company&quot;}\" data-sheets-userformat=\"{&quot;2&quot;:573,&quot;3&quot;:[null,0],&quot;5&quot;:{&quot;1&quot;:[{&quot;1&quot;:2,&quot;2&quot;:0,&quot;5&quot;:[null,2,0]},{&quot;1&quot;:0,&quot;2&quot;:0,&quot;3&quot;:3},{&quot;1&quot;:1,&quot;2&quot;:0,&quot;4&quot;:1}]},&quot;6&quot;:{&quot;1&quot;:[{&quot;1&quot;:2,&quot;2&quot;:0,&quot;5&quot;:[null,2,0]},{&quot;1&quot;:0,&quot;2&quot;:0,&quot;3&quot;:3},{&quot;1&quot;:1,&quot;2&quot;:0,&quot;4&quot;:1}]},&quot;7&quot;:{&quot;1&quot;:[{&quot;1&quot;:2,&quot;2&quot;:0,&quot;5&quot;:[null,2,0]},{&quot;1&quot;:0,&quot;2&quot;:0,&quot;3&quot;:3},{&quot;1&quot;:1,&quot;2&quot;:0,&quot;4&quot;:1}]},&quot;8&quot;:{&quot;1&quot;:[{&quot;1&quot;:2,&quot;2&quot;:0,&quot;5&quot;:[null,2,0]},{&quot;1&quot;:0,&quot;2&quot;:0,&quot;3&quot;:3},{&quot;1&quot;:1,&quot;2&quot;:0,&quot;4&quot;:1}]},&quot;12&quot;:0}\">Audit Requirements for Private Limited Company<\/span><\/a><\/p>\n<p><a href=\"https:\/\/www.legalraasta.com\/private-limited-company-registration-process\/\" target=\"_blank\" rel=\"noopener noreferrer\"><span data-sheets-value=\"{&quot;1&quot;:2,&quot;2&quot;:&quot;Private Limited Company registration process and How to startup Private Limited Company&quot;}\" 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sans-serif&quot;,&quot;16&quot;:11,&quot;26&quot;:400}\">Private Limited Company registration process and How to startup Private Limited Company<\/span><\/a><\/p>\n<p><a href=\"https:\/\/www.legalraasta.com\/requirement-of-a-private-limited-company\/\" target=\"_blank\" rel=\"noopener noreferrer\"><span data-sheets-value=\"{&quot;1&quot;:2,&quot;2&quot;:&quot;Requirement of a Private Limited Company&quot;}\" data-sheets-userformat=\"{&quot;2&quot;:8403901,&quot;3&quot;:[null,0],&quot;5&quot;:{&quot;1&quot;:[{&quot;1&quot;:2,&quot;2&quot;:0,&quot;5&quot;:[null,2,0]},{&quot;1&quot;:0,&quot;2&quot;:0,&quot;3&quot;:3},{&quot;1&quot;:1,&quot;2&quot;:0,&quot;4&quot;:1}]},&quot;6&quot;:{&quot;1&quot;:[{&quot;1&quot;:2,&quot;2&quot;:0,&quot;5&quot;:[null,2,0]},{&quot;1&quot;:0,&quot;2&quot;:0,&quot;3&quot;:3},{&quot;1&quot;:1,&quot;2&quot;:0,&quot;4&quot;:1}]},&quot;7&quot;:{&quot;1&quot;:[{&quot;1&quot;:2,&quot;2&quot;:0,&quot;5&quot;:[null,2,0]},{&quot;1&quot;:0,&quot;2&quot;:0,&quot;3&quot;:3},{&quot;1&quot;:1,&quot;2&quot;:0,&quot;4&quot;:1}]},&quot;8&quot;:{&quot;1&quot;:[{&quot;1&quot;:2,&quot;2&quot;:0,&quot;5&quot;:[null,2,0]},{&quot;1&quot;:0,&quot;2&quot;:0,&quot;3&quot;:3},{&quot;1&quot;:1,&quot;2&quot;:0,&quot;4&quot;:1}]},&quot;10&quot;:2,&quot;11&quot;:0,&quot;12&quot;:0,&quot;14&quot;:[null,2,0],&quot;15&quot;:&quot;Calibri, sans-serif&quot;,&quot;16&quot;:11,&quot;26&quot;:400}\">Requirement of a Private Limited Company<\/span><\/a><\/p>\n<\/blockquote>\n<p>&nbsp;<\/p>\n<p>&nbsp;<\/p>\n","protected":false},"excerpt":{"rendered":"<p>INTRODUCTION Companies Act Section 2(68) states that a company with the minimum paid-up share capital of one lakh rupees or higher as may be prescribed, is said to be a Private Company. It provides that: there is a restriction in transferring its shares its members are limited to two hundred, except in One Person Company prohibits [&hellip;]<\/p>\n","protected":false},"author":15,"featured_media":13553,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[556],"tags":[205,131,133,202,204,203,83],"class_list":["post-13530","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-company-articles","tag-advantages-of-private-company","tag-companies-act","tag-companies-act-2013","tag-companies-act-section-268","tag-private-company","tag-private-limited-comapnies","tag-small-business"],"acf":[],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v27.3 - https:\/\/yoast.com\/product\/yoast-seo-wordpress\/ -->\n<title>What is Companies Act Section 2(68) | Legal Raasta Knowledge Portal |<\/title>\n<meta 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