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MCQs · Q2

Q.As per Section 2(68) of the Companies Act, 2013, what is the maximum number of members a private company can have (excluding present and past employee-members)?

(a) 7
(b) 50
(c) 100
(d) 200
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✓ Free question

Section 2(68) of the Companies Act, 2013 defines a private company as one whose articles restrict the transfer of its shares, limit its members to a maximum of 200 (excluding present and past employee-members who continue to hold shares from their employment), and prohibit any invitation to the public to subscribe for its securities. This maximum-200 ceiling, together with a minimum of 2 members, is precisely what separates a private company from a public company, which under Section 2(71) has a minimum of 7 members but no upper limit at all. A private company that grows past 200 members (in a way not falling within the employee exception) can no longer legally remain a private company and must convert to a public company.

✓Final answer

(d) 200

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