Aman started his business of manufacturing designer home decor items in Mumbai. His business was growing because of the quality products he offered. He thought of expanding it to other cities of Maharashtra and for this he required more financial and human resources. Aman approached his Chartered Accountant, Rohan, for advice on his future course of action. Rohan suggested to Aman to go for company form of organisation where he could start even with two members, and have a minimum paid up capital of ₹ one lakh. Acting on the advice of Rohan, Aman formed a company with one of his friends. (a) Identify the type of company formed by Aman and his friend. (b) State any four privileges enjoyed by the type of company identified in (a) above.

Question

Accepted Answer

(a) Private Company.
(b) Privileges: 1. Only two members required to form.

2. Only two directors required for quorum.

3. Not required to file a prospectus.

4. Can commence business immediately after incorporation.

5. Statutory meeting/filing statutory report not required.

6. Non-member cannot inspect P&L A/c.

7. Limit on managerial remuneration does not apply.

8. Maintaining index of members not required.