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Understanding Section 2(68): Definition of "Private Company"

July 16, 2024 by Team Instabizfilings

Understanding Section 2(68): Definition of "Private Company"

As it has been seen in company law it is necessary to understand the different classifications and definitions. But there is one vital definition which the Companies Act gives under Section 2(68), that of a “Private Company”. This blog therefore intends to give a clearer insight on what falls under Section 2 (68) clarifying on the features of private compnay, the advantages and disadvantages of a private company.

 

Definition of a Private Company:

 

According to Section 2(68) of the Companies Act 2013, a private company is defined as a company that: Restricts the right to transfer its shares. Limits the number of its members to a maximum of 200 (excluding employees and former employees who are also members). BARS the Company from inviting the public to subscribe for its shares or debentures.

 

Implications and Privileges of Being a Private Company:

 

Being classified as a private company comes with several implications and privileges. Some of them include:

 

  • Ease of Formation:

 

  • Limited Liability:

 

  • Greater Control:

 

  • Confidentiality:

 

Restrictions and Limitations:

 

While private companies enjoy certain privileges, they are also subject to specific restrictions and limitations, including:

 

  • Transfer of Shares:

 

  • Membership Limit:

 

  • Public Offerings:

 

Conclusion:

 

 

 

Disclaimer

 

The information provided in this blog is purely for general informational purposes only. While every effort has been made to ensure the accuracy, reliability and completeness of the content presented, we make no representations or warranties of any kind, express or implied, for the same. 

 

We expressly disclaim any and all liability for any loss, damage or injury arising from or in connection with the use of or reliance on this information. This includes, but is not limited to, any direct, indirect, incidental, consequential or punitive damage.


Further, we reserve the right to make changes to the content at any time without prior notice. For specific advice tailored to your situation, we request you to get in touch with us.


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