A private company is one which.
(A) restricts the right to transfer share
(B) limits the number of members to 200
(C) must have at least 2 persons
(D) include a company which is subsidiary of public company.
Choose the correct answer from the options given below:
Answer & explanation
Correct answer: option 2
The correct answer is Option (2) → (A), (B) and (C) only
A private company is one which, by its articles of association, restricts the right to transfer its shares, has at least two persons (except a one person company) and limits its members to 200.
(A) restricts the right to transfer share Correct. The articles of a private company restrict the transfer of its shares, so outsiders cannot freely buy in.
(B) limits the number of members to 200 Correct. A private company can have at most 200 members, not counting its employees.
(C) must have at least 2 persons Correct. A private company needs a minimum of two members; only a one person company can have one.
(D) include a company which is subsidiary of public company. Incorrect. Under the Companies Act, 2013, a company that is a subsidiary of a public company is treated as a public company, even if its articles are those of a private company. So it is not included in the private company.
NCERT (2026-27 edition):
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