"In spite of certain restrictions imposed on a private company, it enjoys certain privileges under the Companies Act and a substantial number of entrepreneurs prefer to form a private company." Comment.

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In spite of certain restrictions, a private company enjoys several privileges under the Companies Act which make it a preferred choice for a substantial number of entrepreneurs: (i) Only two members are required to form a private company. (ii) Only two directors are required to constitute the quorum to validate the proceedings of the meetings. (iii) It can file a statement in lieu of prospectus with the Registrar instead of issuing a prospectus to the public. (iv) It can commence its business immediately after incorporation. (v) Holding of a statutory meeting or filing of a statutory report is not required. (vi) A non-member cannot inspect the copies of the profit and loss account filed with the Registrar. These privileges, coupled with limited liability and ease of formation, explain why entrepreneurs prefer the private company form despite the restrictions imposed on it.