State the essential features of a private company.

Explanation

Features of a private company:


1.No minimum capital required: There was a minimum paid-up share capital requirement of Rs. 1 lac previously, but that is omitted now.

2.Minimum 2 and maximum 200 members: A private company can have a minimum of just two members (but just one is enough if it a One Person Company), and a maximum of up to 200 members.

3.Transferability of shares restricted: Private companies cannot freely transfer their shares to the public like public companies. This is why stock exchanges never list private companies.

4.“Private Limited”: All private companies must include the words “Private Limited” or “Pvt. Ltd.” in their names.

5.Privileges and exemptions: Since private companies do not freely transfer their shares and involve limited interest by members, the law has granted them several exemptions that public companies do not enjoy.