Question

Which of the following are the characteristics of a private company?
X. Limited liability of members
Y. Perpetual succession
Z. Free transferability of shares
Correct option is

• A. X and Y
• B. Y and Z
• C. X and Z
• D. X, Y and Z

Answer 1

Answer: (A)

X and Y

Private company is defined in section 2(68) of the Companies Act, 2013 and it means a company which has a minimum paid-up capital of one lakh rupees or such higher paid-up capital as may be prescribed and by its articles restricts the right to transfer its shares, if any Some other features of Private Company are:
It restricts the number of members to 200 except in one Person Company, not including person who are in employment of the company and the persons who have been in employment with the company and were/are also members of the company and continue to be members of the company even after the employment is ceased.
Private company prohibits any invitation to the public for subscription of shares.
It prohibits any invitation or acceptance of deposits from persons other than its members, directors and their relatives
For calculating the number of members if two or more persons hold one or more shares in a company jointly than they shall be treated as one that is a single member.
Minimum number of members in a private limited company will be 2 and maximum number of members will be 200.