IAS General Studies Prelims Question No. 95

A Private Company is different from a Public Company in the sense that__:
1. There is a restriction on transferability of shares in Private Company, while in Public company, there is no such restriction
2. A private company should have at least one director, a public company should have at least 2 directors
Choose the correct option from the codes given below:
[A] Only 1 is correct
[B] Only 2 is correct
[C] Both 1 & 2 are correct
[D] Neither 1 nor 2 is correct
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[A] Only 1 is correct
Comparison of a Private Limited Company and Public Limited Company
DistinctionPrivate CompanyPublic Company
Minimum Paid-up Capital1 Lakh5 Lakh
Minimum Number of Members27
Maximum Number of Members50No restriction
Transerferability of sharesComplete RestrictionNo Restriction
Issue of ProspectusProhibitedFree
Number of DirectorAt least 2At least 3
Commencement of BusinessImmediately after incorporationOnly after commencement of business certificate is obtained
Statutory meetingNo ObligationObligatory
Quorum2 members5 members
Managerial remunerationNo restrictionCan not exceed more than 11% of Net Profits

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