Why is a private company more desirable than a public company. Give any two reasons.

Question

Accepted Answer

A private company is more desirable than a public company because of the following privileges: (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 by a private company. (vi) A non-member cannot inspect the copies of the profit and loss account filed with the Registrar.