"a private company avoids many of the defects of a public company." explain.
The given statement is true. A private company overcomes some of the major limitations of a public company which are listed as follows.
1) Ease of formation - A private company can be formulated with the composition of only two members and it only has to undergo two steps in the process of formation. On the other hand, a public company can start its business only after getting its certificate of incorporation and it takes four steps in the process of formation to start a public company.
2) Control - The management of a private company is usually comprised of friends and relatives coming together to start a business. This makes a private company more control friendly as compared to a public company.
3) Flexibility in operations - A number of procedures and legal delays are exempted for private companies which are strictly followed in case of public companies.
1) Ease of formation - A private company can be formulated with the composition of only two members and it only has to undergo two steps in the process of formation. On the other hand, a public company can start its business only after getting its certificate of incorporation and it takes four steps in the process of formation to start a public company.
2) Control - The management of a private company is usually comprised of friends and relatives coming together to start a business. This makes a private company more control friendly as compared to a public company.
3) Flexibility in operations - A number of procedures and legal delays are exempted for private companies which are strictly followed in case of public companies.