State the important privileged available to a private company
Answers
Explanation:
➡️ Important privileges available to a private company are as follows :
Private company need not issue of prospectus or file a statement in lieu of prospectus before raising capital and allotting the shares to its member.
Restriction regarding for the issue of capital do not apply on private companies.
Restrictions on starting of a business does not apply on private companies.
Holding a statutory meeting and submission of statutory report is not necessary for a private company.
Provisions relating to general meetings ,if articles of company otherwise provide , do not apply to private companies.
Ceiling on maximum managerial remuneration is not applicable to private companies.
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A private company enjoys certain exemptions or privileges which are often not available to a public company. Some of the privileges enjoyed by a private company are given below:
(a) Lesser number of members required: A private company requires only two members for formation, while a public company requires at least seven members.
(b) Commencement of business: A private company can start its business operations right from the day of receiving the certificate of incorporation. On the other hand, it is mandatory for a public company to obtain a certificate of commencement along with a certificate of incorporation before starting business.
(c) No restriction on advancing loans to the directors: In the case of a private company, there is no restriction on the amount of loans that can be granted to the directors. No prior permissions are required to be sought for advancing such loans. In contrast, a public company has to seek permission from the government before advancing loans to its directors.
(d) Lesser number of directors required for operations: A private company can continue operations with just two directors, whereas a public company must have at least three directors to continue its operations.
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