Private Company means a company which by its articles of association.
• Restricts the right of members to transfer its shares.
• Limits the number of its members to fifty. In determining this number of 50 employee members and ex-employee members are not to be considered.
• Prohibits any invitation to the public to subscribe to any shares in or the debentures of the company.
If a private company contravenes any of the aforesaid three provisions, it ceases to be a private company and loses all the exemptions and privileges which private company is entitled. Privileges:
• Limited liability,
• The simple and easy formation,
• Immediate commencement of business upon incorporation,
• Liberal payment of remuneration and loans to directors without any restrictions,
• Easier inter-corporate loans
• Lesser disclosure requirements
• Tremendous ease in operation
• Two directors are enough
• Two Shareholders are adequate
• Need not declare a dividend
