."In spite of certain restrictions imposed on a private company, it enjoys certain privileges under the Companies Act and a substantial number of entrepreneurs prefer to form a private company." Comment.
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Answer:
Inspite of certain restrictions imposed on a private company, it enjoys certain privileges under the Companies
Act. A substantial number of entrepreneurs prefer to form a private company because of the following important
privileges:
(1) Only two members are required to form a private company.
(2) Only two directors are required to constitute the quorum to validate the proceedings of the meetings.
(3) Such company can file a statement in lieu of prospectus with the Registrar of Companies.
(4) It can commence its business immediately after incorporation.
(5) Holding of a statutory meeting or filing of a statutory report is required by a private company.
(6) A non-member cannot inspect the copies of the profit and loss A/c filed with the Registrar.
(7) Limit on payment of maximum managerial remuneration does not apply to a private company.
(8) Restrictions on appointment and reappointment of managing director do not apply.
(9) Maintaining of index of members is not required by a private company.
(10) Directors of the private company need not have qualification shares.
(Any four)
Explanation: