State the important privileges available to a private company as compared to public limited company.
State the important privileges available to a private company as compared to public limited company.
The following are some of the privileges of a private limited company as compared to a public limited company.
(i) The minimum number of members required to form a private company is only two while at least seven people are needed to form a public company.
(ii) A private company does not need to issue a prospectus as public is not invited to subscribe to its shares.
(iii) Allotment of shares can be done without receiving the minimum subscription.
(iv) A private company can start a business as soon as it receives the certificate of incorporation and does not have to wait for the receipt of a certificate of commencement as in the case of a public company.
(v) A private company needs to have only two directors as against the minimum of three directors in the case of a public company.
(vi) A private company is not required to keep an index of members unlike a public company.
(vii) There is no restriction on the amount of loans to directors in a private company while in case of a public company permission from the government is required.
The following are some of the privileges of a private limited company as compared to a public limited company.
(i) The minimum number of members required to form a private company is only two while at least seven people are needed to form a public company.
(ii) A private company does not need to issue a prospectus as public is not invited to subscribe to its shares.
(iii) Allotment of shares can be done without receiving the minimum subscription.
(iv) A private company can start a business as soon as it receives the certificate of incorporation and does not have to wait for the receipt of a certificate of commencement as in the case of a public company.
(v) A private company needs to have only two directors as against the minimum of three directors in the case of a public company.
(vi) A private company is not required to keep an index of members unlike a public company.
(vii) There is no restriction on the amount of loans to directors in a private company while in case of a public company permission from the government is required.
