Question

State the main features of a private company.

Answer 1

1. A private company must have at least two members and no more than two hundred members (excluding employees who hold shares).
2. It cannot invite public subscriptions for its shares, debentures, or public deposits.
3. A private company requires a minimum share capital of ₹ 1 lakh.
4. Share transfers are restricted, which means that shareholders cannot freely sell their shares.
5. Shareholders have limited liability, which means their personal assets are safeguarded from the company’s problems, and they are only liable for the amount owed on their shares.