Which of the following statements is not a feature of a private company?
Select one:
a. Does not restrict on the number of its members to any limit.
b. Restricts the rights of members to transfer its shares.
c. Does not involve participation of public in general.
Please choose an appropriate answer
Answers
Answer: C IS THE CORRECT OPTION
Step-by-step explanation:
C is the correct answer as it allows participation of public in order to gain reputation and also to raise funds known as public funds it's a characteristic of social responsibility as well!
Which of the following statements is not a feature of a private company?
(a) is the correct option.
According to the Companies Act, 2013, a private company should have a minimum of 2 members for starting. It also has a maximum member limit of 200, excluding past or present employees. So, the statement that it does not restrict the number of its members is incorrect.
- (b) is not the correct option.
In a private company, the transferability of shares is limited. The share transfer is restricted by the Articles of Association. Any private agreement between the members of the company is not binding on the company itself or the other shareholders.
- (c) is not the correct option.
A private company is not required to issue a prospectus under the Companies Act because a prospectus is issued to invite shares from the public and usually in a private company, the public is not invited to subscribe for shares.