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Flora Fauna Limited was registered as a public company. There are 230 members in the company as
noted below:
(a) Directors and their relatives 190
(b) Employees 15
(c) Ex-Employees (Shares were allotted when they were employees) 10
(d) 5 couples holding shares jointly in the name of husband and wife (5*2) 10
(e) Others 5
The board of Directors of the company propose to convert it into a private company. Also advise
whether reduction in the number of members is necessary.?
Most Upvoted Answer
Flora Fauna Limited was registered as a public company. There are 230 ...



Conversion of Public Company to Private Company
Flora Fauna Limited, with 230 members, is planning to convert from a public company to a private company. The members are categorized as follows:


Reasons for Conversion:
  • Increased Flexibility: Private companies have more flexibility in operations and decision-making compared to public companies.
  • Reduced Compliance Requirements: Private companies have fewer regulatory requirements, reducing the burden of compliance.
  • Control over Ownership: Conversion to a private company allows for tighter control over ownership and management.



Necessity of Reducing Number of Members:
According to the Companies Act, a private company must have a minimum of two members and a maximum of 200 members. Since Flora Fauna Limited currently has 230 members, it is necessary to reduce the number of members to comply with the legal requirements for a private company.


Options for Reduction:
  • Buyback of Shares: The company can buy back shares from certain categories of members to reduce the overall number.
  • Consolidation of Shareholding: Couples holding shares jointly can consolidate their holdings to count as a single member.
  • Transfer of Shares: Members who do not wish to continue as shareholders can transfer their shares to eligible buyers.



Conclusion:
In conclusion, the conversion of Flora Fauna Limited from a public company to a private company is a strategic move that offers various benefits. However, to comply with the legal requirements, the company must take steps to reduce the number of members to meet the criteria for a private company.

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Flora Fauna Limited was registered as a public company. There are 230 members in the company asnoted below:(a) Directors and their relatives 190(b) Employees 15(c) Ex-Employees (Shares were allotted when they were employees) 10(d) 5 couples holding shares jointly in the name of husband and wife (5*2) 10(e) Others 5The board of Directors of the company propose to convert it into a private company. Also advisewhether reduction in the number of members is necessary.?
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Flora Fauna Limited was registered as a public company. There are 230 members in the company asnoted below:(a) Directors and their relatives 190(b) Employees 15(c) Ex-Employees (Shares were allotted when they were employees) 10(d) 5 couples holding shares jointly in the name of husband and wife (5*2) 10(e) Others 5The board of Directors of the company propose to convert it into a private company. Also advisewhether reduction in the number of members is necessary.? for CA Foundation 2024 is part of CA Foundation preparation. The Question and answers have been prepared according to the CA Foundation exam syllabus. Information about Flora Fauna Limited was registered as a public company. There are 230 members in the company asnoted below:(a) Directors and their relatives 190(b) Employees 15(c) Ex-Employees (Shares were allotted when they were employees) 10(d) 5 couples holding shares jointly in the name of husband and wife (5*2) 10(e) Others 5The board of Directors of the company propose to convert it into a private company. Also advisewhether reduction in the number of members is necessary.? covers all topics & solutions for CA Foundation 2024 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for Flora Fauna Limited was registered as a public company. There are 230 members in the company asnoted below:(a) Directors and their relatives 190(b) Employees 15(c) Ex-Employees (Shares were allotted when they were employees) 10(d) 5 couples holding shares jointly in the name of husband and wife (5*2) 10(e) Others 5The board of Directors of the company propose to convert it into a private company. Also advisewhether reduction in the number of members is necessary.?.
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