732 (Companies Act) What is a Public Unlisted Company (Hindi)

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• published: 02 Jul 2014
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732 (Case Company Act) - What is the difference between Public Unlisted Companies and Delisted Companies ? Video Link - Solution - By Amlan Dutta Say i have a website , www.filingreturnsonline.com which is a blog offering consultancy services in the matters of tax and finance (1) Proprietorship Business- Business carried out in the capacity of a individual Act for registration - Here there is no act i.e company act , partnership act etc So , simply tax registration for the business needs to be done I simply apply for service tax registration (ST 1 ) ( in my blog case , i do services for consultancy so i apply for that ) and when i get the ST 2 certicate (tax certificate ) that's it , my blog is registered as a propietorship business ....here the liability is unlimited implying if the business goes bankrupt , then i alone shall be responsible for meeting out all the liabilities of the business (2) Company ----say i decided to form a company(limited by shares ) Quite evidently it can be done in two types - Private when i distribute shares of the company to my close friends and relatives in return of share capital ( number of shareholders being between 20 - 50 ) Public , when i release the shares to the public via IPO in return of share capital But there is another term called as public unlisted what happens here is that i distribute shares to more than 50 shareholders ...perhaps FRO employees , my friends and close relatives So , now it is nolonger a private limited , it becomes public but since i have not listed it yet in the stock exchange , so it is called a public unlisted company There are many such examples of this in the foreign country where major companies have kept the shareholding limited to themselves , their families and the employees and decided not to list their companies ' A publicly unlisted company is the combination of a small business and a public company that can sell shares to raise money for ventures. In contrast to a proprietary company, a publicly unlisted company is able to sell to an unlimited number of shareholders but, because the business is small, it is not listed on the official stock market. When an investor buys shares, he or she can sell them back to the company at a later date or can sell them to someone else, because there is no official market for these shares. Investors cannot check the stock market to quickly identify whether the stock is going up or down in value, so an unlisted public company has strict rules for reporting losses or gains to investors. Public businesses are those that go on the stock market and sell shares to raise money for projects and ventures while helping the investors profit from their investment. A publicly unlisted company follows this same model, but they are not on the stock market. They are public, in the sense that the public can buy shares from the business. The unlisted quality is what most differentiates this business. Ad The reason a publicly unlisted company is unlisted is not so much because of laws, but because of size. Unlisted companies are often too small to be listed on the stock market. Though they are small, they can sell shares to an unlimited number of shareholders, but some investors are wary of returns, so the number of shareholders per company is usually small. They are not listed in the stock market, so publicly unlisted company models have a different relationship with investors than public companies. They usually do not advertise themselves to investors and, in some regions, investor advertising is illegal for this company model. In areas where it is legal, a promoter will usually talk to investors and try to sell shares. These companies are under strict reporting guidelines, usually having to report at the end of the financial year or quarter, so investors know how the shares are doing. When an investor wants to sell his shares, he or she can sell to one of three entities. The two obvious choices are selling back to the promoter or the business, just like on the stock market. The third entity is anyone else interested in buying the shares from the investor. This is uncommon but is another option for investors. Now what are delisted companies - Delisted companies are when say the company has been involved in scams etc and has come under SEBI scanner and subsequently SEBI decides to delist such companies from the exchange , Typically , think of scams like Satyam etc etc If SEBI had removed the company from stock market listing , what it would mean is that the company has become delisted . Let education be practical , Peace , Amlan Dutta