What are the Privileges of a Private Company?


A private company enjoys several exemptions and privileges under the Companies Act. Some of these privileges are given below:

1. Members:

A private company can be started by two persons only, whereas seven persons are required to start a public company.


2. Commencement of business:

A private company can commence business immediately after its incorporation. It is not required to obtain the certificate of commencement of Business.

3. Prospectus:

A private company is not required to issue or file a prospectus or statement in lieu of prospectus with the Registrar of Companies.


4. Statutory meeting:

A private company is not required to hold a statutory meeting or to file statutory report with the Registrar.

5. Directors:

A private company can have only two directors. It is exempted from restric­tions relating to the appointment, reappointment, retirement, and remuneration etc., of managerial personnel.



A private company can issue deferred shares with disproportionate voting rights. It is not required to observe restrictions concerning allotment of shares, minimum subscription, right shares, investment of funds in the same groups of companies, etc.

7. Transfer of shares:

A private company can refuse to register any transfer of shares with­out any appeal.


8. Accounts:

A private company is not required to keep its annual accounts open for inspec­tion for non-members.

9. Quorum:

Two members personally present is sufficient quorum for the general meeting of a private company.


10. Index of members:

A private company is not required to prepare and maintain any index to the Register of members.

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