What do you meant by a Private company?

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A private company means a company which by its articles restricts the right to transfer its shares, Limits the number of its member to fifty (excluding members who are or were in the employment of the company)…

A private company means a company which by its articles.

(i) Restricts the right to transfer its shares.

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(ii) Limits the number of its member to fifty (excluding members who are or were in the employment of the company), and

(iii) Prohibits any invitation to the public to subscribe for any shares or debentures of the company. [section 3(1)(iii)]

Where two or more person holds one or more shares in a company jointly, they shall be treated as a single member. There should be at least two people to form a private company and the maximum number of member in a private company and the maximum numbers of members in a private company cannot exceed 50. A private limited company is required to add the words ‘Private Limited’ at the end of its name. The restriction as to transfer of share must be made applicable in respect of all shareholders. There cannot be any discrimination.

If a private company fails to comply with any of the restriction contained in the articles, it ceases to be entitled to some of the privileges of a private company.

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