Personal liability of a Director of a Private Company

Being a private company offers several distinct advantage is something very well known. For instance, under Companies Act, 2013 (the Act), apart from specific exemptions and relaxations granted through a Notification dated 05th June 2015, makes several provisions not applicable to private companies. For instance, vide the above Notification, it was made clear that the restrictions on the powers of the Board that are contained in Section 180 of the Act are not applicable to a private company. On the other hand, Section 197 of the Act specifically states that it applies only to a public company. In short, it is advantageous to remain as a private company until there is a specific need for converting the same into a public company such as a situation when there is a need to issue shares to public.

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