Practicing Success

Target Exam

CUET

Subject

Accountancy

Chapter

Accounting for Shares

Question:

Which of the following is a feature of a public company?

Options:

No restriction on the transfer of shares

Minimum 7 member

No limit to the maximum number of persons

All of these

Correct Answer:

All of these

Explanation:
  1. Minimum seven shareholders of the company are required to form a company.

  1. Minimum 3 directors are required to form this business entity. At least one director must be a resident of India. It is important to note here that shareholders and directors can be the same.

  2. As per the Companies Act, 2013 there is not limit for the maximum number of members in a public company, the minimum number should be seven (7) but maximum number can be unlimited. 

    Public Company: A public company means a company which (a) is not a private company; (b) is a company which is not a subsidiary of a private company.
    Private Company: A private company is one which by its articles of association: (a) Restricts the right to transfer its shares; (b) A private company must have at least 2 persons, except in case of one person company; (c) Limits the number of its members to 200 (excluding its employees).