State the important privileges available to a private company.

Solution

The important privileges available to a private company are as follows :

(i) A private company can be formed by only two members whereas seven people are needed to form a public company.

(ii) In a private company, public participation is not permitted and hence no need to issue prospectus for subscribtion to the shares of a private company.

(iii) The minimum paid-up capital for a privtae company is 1 lakh as against 5 lakhs for a public limited company.

(iv) A private company can start business as soon as it receives the certificate of incorporation from Registrar of Companies. A public company on the other hand has to wait for the receipts of certificate of commencement, before it can start business.

(v) A private company needs to have only two directors as against the minimum of three directors in the case of public company.

(vi) A private company is not required to keep an index of members which is necesgary in the case of a public company.

(vii) There is no restriction values against loan to directors in a private company. Therefore, there is no need to take permission from the government for granting the same as it requires in the case of a public company.

Some More Questions From Forms of Business Organization Chapter

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Forms Of Business Organization

State the important privileges available to a private company.

Some More Questions From Forms of Business Organization Chapter

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