Question 1

What are the benefits or privileges of Private Company?

Answer

(1)    Two or more persons may form a company. [Sec. 3(1)(b)]

(2)    Kinds of share capital [Sec.43] and voting rights [Sec.47] can be provided by making a clause in memorandum and articles of association.

(3)    Passing of ordinary resolution is sufficient for offering of further shares to employees. [Sec.62(1)(b)]

(4)    Financial assistance can be given to its employees for purchase of or subscribing to its shares or shares in its holding company. [Sec.67(2)]

(5)    Restrictions (conditions)  for acceptance of deposits from members is not applicable. [Sec.73(2)]

(6)    Resolutions to be passed only at the meeting of the board of directors are not required to file with the registrar. [Sec.117(3)(9)]

(7)    Need not prepare a report on the Annual General Meeting. [Sec.121(1)]

(8)    Need not prepare a statement by the board of its own performance and that of its committees and individual directors. [Sec.134(3)(p)]

(9)    Private companies [OPC/Small/Dormant] having paid up share capital of less than 100 crore ₹ are excluded from the limits of audits by an auditor which is required to number 20. [Sec.141(3)]

(10)   Need not have more than two directors. [Sec.149(1)(a)]

(11)    Not required to have independent directors. [Sec. 149(4)]

(12)    Not required the retirement of directors by rotation. [Sec. 152(6)]

(13)    Requirement of deposit of ₹ 1,00,000 is not required to stand for directorship other than retiring directors. [Sec.160]

(14)    More than one director can be appointed through a single resolution. [Sec. 162]

(15)    The directorship of a private company /  small company /  one person company  which is either a holding or a subsidiary company of a public company will not be included in  determining the maximum number of directorships that a person may hold in public companies which is restricted to 10. [Sec. 165(1)]

(16)    Additional grounds for disqualification, for appointment [Sec.164(3)],  for vacation [Sec. 167(4)]  of office of a director may be provided in the articles.

(17)    Exempt from the provisions of having an audit committee constituted by the board of directors. [Sec. 177(1)]

(18)    Exempt from the constitution of a nomination and remuneration committee [Sec.178(1)]  as well as stakeholders relationship committee. [Sec. 178(5)]

(19)    The company sells, leases or otherwise disposes of or owns more than one undertaking then special resolution is not required to exercise such power of the board. [Sec. 180]

(20)    Interested director can participate in the meeting after disclosing his interest. [Sec.184(2)]

(21)    If certain conditions are fulfilled under section 185 then give a loan to its director or whom the director is interested. [Sec.185]

(22)    Company shall enter into any contract or arrangement with a related party and can vote on such resolution as a member of the company. [Sec. 188(1)]

(23)    Provisions relating to contracts of employment with managing or whole time directors do not apply to private limited companies. [Sec. 190(4)]

(24)    Approval of Central Government on variation of terms of appointment of managing director, whole time director or manager from Schedule V is not required. [Sec. 196(4) & (5)]

(25)    Total managerial remuneration may exceed 11% of the net profits. [Sec. 197(1)]

(26)    The central government may grant further privileges /  exemptions to private companies by issuing a notification. [Sec. 462(1)]