XYZ LTD. was promoted in 2019 by a group of 5 friends. As business of the company has grown
considerably over the years, its management is now planning to convert it into a public company
and raise funds through public subscription of funds for expansion projects. Describe the
privileges that company will have to forego in order to convert in public ltd. company.
Answers
Answered by
4
Following are the privileges that the company will have to forego in order to convert in public ltd. company:
Explanation:
- A private company is easier to form than a public limited company.
- A private firm needs only two directors whereas a public company needs three.
- A private company can start business instantly after incorporation, a certificate to commence is not required but in the case of a public company, it is obligatory to have a certificate to begin the business.
- A private company needs at least seven members in order to convert into a public company.
- It is required to increase the Paid-up Share Capital and Authorized Share Capital as defined for Public Company.
Similar questions