Question

define private company. write privileges available to a private limited company as against public limited company.

Answer 1

The directors and the shareholders can be the same people. Capital: Minimum share capital required is only Rs. 1 lakh. The shares in a private limited company cannot be sold or transferred to anyone unless other shareholders agree on the same. There is no option to invite public to subscribe to the shares.

Answer 2

A private company is a business owned by a non-government private individual. The private company shares are not issued in the market to general public and they are not issued through an initial public offerings (IPO). Therefore their shares are less liquid and valuations harder to determine.

The privileges that private company owners get to enjoy is:

1. A minimum of two members can start a private limited company.

2. The shareholders have limited liability which means in case of loss they have to sell the company assets to recover money however they are not liable to sell their own assets.

3. Private limited companies have the advantage of perpetual successor meaning that the company exists even if any owner dies, bankrupts, exits the business etc.

4. Private limited companies do not need to disclose their financial accounts for the general public or issue financial statements in the market like public limited companies.