Question

If a company's shares are not freely transferable, it is a ___________.

• A. private company
• B. public company
• C. both (a) and (b)
• D. none of the above

Answer 1

The correct option is A private company

A ‘Private Company” has been defined under Section 2(68) the Companies Act, 2013 as a company which has the following characteristics:

• a minimum paid capital of 1 lakh rupees,
• Restriction on the right to transfer its shares imposed under its Articles of Association,
• Limitation as to the maximum number of members which should be no more than two hundred (in cases where the company is not a one person company)
• prohibits invitations to the public to subscribe for any of the companies securities.