Maximum no. of members in case of private company isa)200b)100c)150d)50Correct answer is option 'A'. Can you explain this answer?

Question

Answer

We are learning in standard 11 -12
about company act that's belong it.

Answer

According to company act 2013  Maximum number of members in case of private company is 200 ( except for one person company).

Answer

To understand the maximum number of members in the case of a private company, we need to refer to the Companies Act, 2013. According to the Act, the maximum number of members in a private company is 200. Let's explore the reasons behind this limit and its implications.

Private Company:
- A private company is defined as a company having a minimum paid-up share capital of one lakh rupees or such higher amount as may be prescribed, and by its articles, restricts the right to transfer its shares, limits the number of its members to 200 (excluding the present and past employees who are also members), and prohibits any invitation to the public to subscribe for its shares or debentures.

Reasons for the Limit:
1. Ease of Management: By restricting the number of members, the private company can ensure effective management and decision-making. A smaller group of members allows for better communication and coordination.

2. Confidentiality: Private companies often deal with sensitive information and want to maintain confidentiality. Limiting the number of members reduces the chances of information leakage.

3. Flexibility: A smaller number of members allows for greater flexibility in decision-making, as there are fewer opinions and perspectives to consider. This can expedite the decision-making process.

4. Simplicity in Compliance: Compared to public companies, private companies have fewer compliance requirements. Limiting the number of members simplifies the compliance process and reduces the administrative burden.

Implications:
1. Exceeding the Limit: If a private company exceeds the maximum limit of 200 members, it automatically becomes a public company. The company will then be subject to the regulations applicable to public companies, including increased compliance requirements and disclosure obligations.

2. Shareholder Restrictions: The articles of association of a private company must include provisions that restrict the right to transfer shares. This restriction ensures that the ownership and control of the company remain within a closely-knit group of individuals.

3. Exclusion of Employees: The maximum number of members does not include present and past employees who are also members. This exemption allows private companies to offer employee stock options and include them as members without affecting the limit of 200.

In conclusion, a private company in India can have a maximum of 200 members. This limit is imposed to ensure efficient management, maintain confidentiality, and simplify compliance. Exceeding this limit will result in the company being classified as a public company, subject to additional regulations and obligations.

Answer

200

Similar CA Foundation Doubts

Flora and fauna limited was registered as a public company there are 230 members in the company the board of directors of the company propose to convert it into a private company also advise whether reduction in the number of member is necessary?

Examine the following whether they are correct or incorrect along with reasons: (i) A company being an artificial person cannot own property and cannot sue or be sued. (ii) A private limited company must have a minimum of two members, while a public limited company must have at least seven members.?

A private limited company must have a minimum of two members while public limited company must have at least seven members?

Top Courses for CA FoundationView all

Quantitative Aptitude for CA Foundation

Accounting for CA Foundation

Business Laws for CA Foundation

Business Economics for CA Foundation

Mock Tests & Past Year Papers for CA Foundation

Top Courses for CA Foundation

Top Courses for CA Foundation

Related Content

CA Foundation Courses

Other Courses

How To Prepare?

Other Exams

Company