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
Answer
[A] Only 1 is correct
| Distinction | Private Company | Public Company |
| Minimum Paid-up Capital | 1 Lakh | 5 Lakh |
| Minimum Number of Members | 2 | 7 |
| Maximum Number of Members | 50 | No restriction |
| Transerferability of shares | Complete Restriction | No Restriction |
| Issue of Prospectus | Prohibited | Free |
| Number of Director | At least 2 | At least 3 |
| Commencement of Business | Immediately after incorporation | Only after commencement of business certificate is obtained |
| Statutory meeting | No Obligation | Obligatory |
| Quorum | 2 members | 5 members |
| Managerial remuneration | No restriction | Can not exceed more than 11% of Net Profits |
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