The infringement of the aforesaid 3 conditions does not automatically convert a private company into a public company. Companies may be limited or unlimited companies. Company may be limited by shares or limited by guarantee. In this case, the liability of members is limited to the amount of uncalled share capital. No member of company limited by the shares can be called upon to pay more than the face value of shares or so much of it as is remaining unpaid.
Members have no liability in case of fully paid up shares.
The liability of the members to pay the guaranteed amount arises only when the company has gone into liquidation and not when it is a going concern. A guarantee company may be a company with share capital or without share capital. The liability of members of an unlimited company is unlimited. Therefore their liability is similar to that of the liability of the partners of a partnership firm. The company does not intend to pay dividend to its members but apply its profits and other income in promotion of its objects.