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Which of the following statements is incorrect?A private company is one which by its articles of association:

  1. A
    Restricts the right to transfer its shares
  2. B
    A private company must have at least 2 persons, except in case of one person company
  3. C
    Its paid up share capital is not more than Rs. 50 Lakhs
  4. D
    Limits the number of its members to 200 (excluding its employees)

Solution & Step-by-step Explanation

According to Section 2(68) of the Companies Act, 2013, a private company restricts share transfers, limits members to 200 (excluding current/former employees), and requires a minimum of 2 members.The amendment to the Companies Act removed any mandatory statutory upper limit or fixed requirement stating that its paid-up share capital cannot be more than . Thus, option C is incorrect.

Practice this question

Try it yourself before checking the explanation above.

Which of the following statements is incorrect?A private company is one which by its articles of association:
A
Restricts the right to transfer its shares
B
A private company must have at least 2 persons, except in case of one person company
C
Its paid up share capital is not more than Rs. 50 Lakhs
D
Limits the number of its members to 200 (excluding its employees)

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