exemptions and privileges available to a private company

The minimum number of members to form a private company is two.Such a company must add the words 'private limited' at the end of its name. A private company enjoys certain exemptions and privileges under the Act which are given below. The exemptions and privileges available to a private company, as provided in the Act are as follows:
1. Only two persons are sufficient to form a private company. (Section12).
2. A private company may start business immediately after its incorporation. There is no need of certificate of commencement of business.(Section 149).
3. At the time,of getting the company incorponlted with the Registrar of companies, the directors are not required to file with the Registrar their consent in
writing to act in that capacity and their undertaking to take up qualification shares, if any [Section 266 (5)].
4. A private company is not required to issue or file a prospectus or statement in lieu of prospectus with the Registrar of Companies. (Section 70).
5. It can proceed to allot shares without having to wait for any such thing as 'minimum subscription' . (Section 69). The reason is that a private company is not required to offer shares to the public.
6. It needs not to have an index of members. (Section 151).
7. A private company has not to hold a statutory meeting or file a statutory report. (Section 165).
8. It is not required to offer new shares to existing shareholders in proportion to their shareholdings. (Section 81).
9. A private company need to have a minimum of two directors only [Sec. 252 (2)].
10. All the directors may be appointed by a single resolution.
II. The directors of a private company need not to retire by rotation(Sec.255), i.e. they can be permanent life directors.
12. Directors of a private company can vote on a contract in which they arc interested. (Sec. 300) .
13. Only two persons can constitute the quorum for the meeting of a private company. [Section 174 (1)].
14. In case of a private company, poll ca!l be demanded by one person present in person or by pro"y, if not more tban seven persons are present; I. These may he Tgarded as advantages of private companies over puhlic companies.if the number of members present is more than seven, two members present in person or by proxy can demand a poll [Sec. 179 (1) (a)].
15. It can give financial assistance directly or indirectly for purchase or subscription of its own shares.
16. The provisions of Sees. 85 to 89 as to kinds of share capital (Sec.85), new issue of share capital (Sec. 86), Voting rights (Sec. 87), issue of new issue of share with disproportio:1ate voting rights (Sec. 88) and termination of disproportionately excessive voting rights in existing comt>anies (Sec. 89), do not apply to a private company.
17. If the Articles provide otherwise, the provision of Sections 171 to 186 of the Companies' Act, 1956, shall not apply to general meetings of private companies. (Section 170).
18. If a private company refuses to register a transfer or transmission of shares, the aggrieved person cannot appeal to the Company Law Boardfor battledress. (Section 111). .
19. The Balance Sheet and Profit and Loss Account of an independent private company filed with the Registrar cannot be inspected by general. public(Section 220).
20. A private company is exempted from many provisions of the Act relating to directors, managing directors or manager. These exemptions are given below:
(i) Directors are not required to file withal tile Registrar, within 30 days of their first appointment, their consent in writing to act as such director [Section 264
(3)].
(ii) A private company may, by its articles, provide additional disqualifications for appointment of directors. [Sec. 274 (3)]
(iii) The appointment, re-appointment and remuneration of whole-time or managing director does not require permission of the Central Government (Sections 268 & 198).
(iv) No restrictions on loan to directors apply to such a company. (Section 295).
(v) The restrictions imposed by the Companies' Act regarding tile remuneration of directors are not applicable to a private company, nor it is required to
obtain sanction of ilie Central Government to increase h remuneration of directors. (Section 309, 310).
(vi) The Company Law Board has no power to prevent changes inboard of Directors (Section 409). .
(vii) The restriction on period of appointment of a managing director/manager (5 years in case of a public company) does not apply touch a company
(Sec. 317).
(viii) No restriction on the number of companies to be managed by a(15 in case of public companies) or by a managing director(two companies in case of
public companies) or by a manager (two companies in case of public companies) apply to such a company (Sees. 275, 316 and 386).
21. It can make inter-corporate loans and investment without any limits or restrictions (Sec. 372A).