A private company is one which by its articles of association:
A. Limits the number of its members to 200 (excluding its employees);
B. Limits the number of its members to 200 (including its employees);
C. Restricts the right to transfer its shares;
D. Must have at least 2 persons, except in case of one person company;
Choose the correct answer from the options given below:
Answer & explanation
Correct answer: option 1
The correct answer is Option (1) → A, C and D only
A private company is one whose articles of association restrict who can join it and who can hold its shares.
A. Limits the number of its members to 200 (excluding its employees); Correct. The limit of 200 counts members other than employees.
B. Limits the number of its members to 200 (including its employees); Incorrect. Employees are left out of the count, not included in it.
C. Restricts the right to transfer its shares; Correct. Shares of a private company are not freely transferable.
D. Must have at least 2 persons, except in case of one person company; Correct. Two persons are the minimum; only a one person company can have a single member.
NCERT (2026-27 edition):
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