Question

Define private company and disadvantages of private company

Answer 1

private company is that company which is run, managed and owned by the private persons..
There is only two members are needed to register private company..


According to the new companies Act 2013, a private company is a very suitable form for carrying on the business of family and small concerns as the minimum number of members required is only two...


DISADVANTAGES are..

1// A private company cannot extend invitation to the public..

2//There is restriction on transfer of shares.

3// Required to comply with condition of section 62 read with 42 of the act before to issue further sharss.

4//Maximum limit is 200 members is a restriction.

5// Cannot commence before the commencement of certificate

Answer 2

Answer:

One of the main disadvantages of a private limited company is that it restricts the transfer ability of shares by its articles.

• In a private limited company the number of shareholders in any case cannot exceed 50.

• Another disadvantage of private limited company is that it cannot issue prospectus to public.