Question

A private company means a company which by its articles _______
(i) Restricts the right to transfer its shares
(ii) Limits the number of members to two hundred not including past and present employee
(iii) Prohibits any invitation to the public to subscribe for any security
Select the correct answer from the options given below:

• A. (i)
• B. (ii)
• C. (iii)
• D. All of the above

Answer 1

Answer: (D)

All of the above

A private company is a company held under private ownership. Private companies may issue stock and have shareholders, but their shares do not trade on public exchanges. It has been defined under section 2(68) of the Companies Act, 2013 as those companies whose articles of association restrict the transferability of shares and prevent the public at large from subscribing to them.

Moreover, the provision under the act limits the number of a private company's members to two hundred and prohibits any invitation to the public to subscribe for any securities of the company.