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A public company is one which has a minimum paid up capital Rs ........ lakhs.
- a)1
- b)5
- c)8
- d)10
Correct answer is option 'B'. Can you explain this answer?
Most Upvoted Answer
A public company is one which has a minimum paid up capital Rs ..........
Understanding Public Companies in India
In India, a public company is defined under the Companies Act, 2013. One of the criteria for a company to be classified as a public company is its paid-up capital.
Minimum Paid-Up Capital Requirement
- The minimum paid-up capital required for a company to be considered a public company is Rs. 5 lakhs.
- This threshold ensures that the company has a certain level of financial backing, which provides credibility and the ability to raise capital through public investments.
Types of Companies
- Public Company: A company that can offer shares to the public and has a minimum paid-up capital of Rs. 5 lakhs.
- Private Company: A company that restricts the right to transfer its shares and has a minimum paid-up capital of Rs. 1 lakh.
Benefits of Being a Public Company
- Access to Capital: Public companies can raise funds by issuing shares to the public.
- Enhanced Visibility: Being publicly listed increases a company's profile and credibility among consumers and investors.
- Liquidity for Shareholders: Shareholders can buy and sell shares in the stock market, providing them with liquidity.
Conclusion
In summary, the classification of a public company in India requires a minimum paid-up capital of Rs. 5 lakhs. This requirement plays a crucial role in ensuring that public companies have sufficient capital to function effectively and attract potential investors.
In India, a public company is defined under the Companies Act, 2013. One of the criteria for a company to be classified as a public company is its paid-up capital.
Minimum Paid-Up Capital Requirement
- The minimum paid-up capital required for a company to be considered a public company is Rs. 5 lakhs.
- This threshold ensures that the company has a certain level of financial backing, which provides credibility and the ability to raise capital through public investments.
Types of Companies
- Public Company: A company that can offer shares to the public and has a minimum paid-up capital of Rs. 5 lakhs.
- Private Company: A company that restricts the right to transfer its shares and has a minimum paid-up capital of Rs. 1 lakh.
Benefits of Being a Public Company
- Access to Capital: Public companies can raise funds by issuing shares to the public.
- Enhanced Visibility: Being publicly listed increases a company's profile and credibility among consumers and investors.
- Liquidity for Shareholders: Shareholders can buy and sell shares in the stock market, providing them with liquidity.
Conclusion
In summary, the classification of a public company in India requires a minimum paid-up capital of Rs. 5 lakhs. This requirement plays a crucial role in ensuring that public companies have sufficient capital to function effectively and attract potential investors.
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A public company is one which has a minimum paid up capital Rs ........ lakhs.a)1b)5c)8d)10Correct answer is option 'B'. Can you explain this answer?
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