State the important privileges available to a private company.
A private company enjoys several privileges over a public company. First, it can be formed with only two members whereas seven members are required to form a public company. Second, there is no need to issue a prospectus as the public is not invited to subscribe to the shares of a private company.
Third, a private company can commence business immediately after receiving the certificate of incorporation, as allotment of shares can be done without receiving the minimum subscription. Fourth, it requires only two directors compared to a minimum of three directors for a public company.
Fifth, a private company is not required to maintain an index of members, which is compulsory in the case of a public company.
Explanation
The textbook explicitly lists five privileges of a private company in comparison to a public company: (1) minimum 2 members vs 7, (2) no prospectus required, (3) can start business after incorporation certificate without minimum subscription, (4) minimum 2 directors vs 3, and (5) no index of members required. These are the key examinable points from the context.