Difference between Public Company and Private Company

In order to understand the key difference between Public Company and Private Company, one must know the main features both.

A private company means a company, which has a minimum paid up share capital of Rs. 1 lakh or such higher capital as may be prescribed and which by its articles provides the following-

  1. restricts the transfer of shares by its members

  2. limits the maximum number of members to 200

A public company refers to a company which has a minimum paid up share capital of Rs. 5 lakh or higher as prescribed by its memorandum and articles and which is not a private company.

Difference between Public Company and Private Company

The key difference between a public company and a private company can be understood with help of the following chart:PRIVATE COMPANYPUBLIC COMPANYIt can be started with a Minimum Paid up Capital of Rs. 1 lakhsIts Minimum Paid up Capital requirement is Rs. 5 lakhsMinimum number of Members – 2 membersMinimum number of Members – 7 membersMax. number of members – 200 members excluding employed membersMax. number of members – No limitMin. number of directors – At least 2At least 3Transferablity of Shares – The right to transfer is restricted by Articles of Association, it requires prior permission of the Board Of Directors of the company.Shares can be transferred freelyPublic subscription is restrictedThey can invite public for subscriptionAcceptance of public deposits – The articles prohibit a private company from accepting deposits.A public company can accept deposits from publicCommencement of business – It can Commence its business immediately after getting the certificate of incorporationIt can only commence business after getting certificate of commencement of businessIssue of prospectus – Not compulsoryCompulsoryStatutory meeting – Not requiredIt must hold a statutory meeting after one month or before 6 months from the date of obtained certificate of commencement of businessManagerial remuneration not fixedFixed at 11% of annual net profitsIndex of members is not requiredIt is requiredProvisions regarding directors – It is free to appoint directorsIt requires the prior approval of Central Govt. to appoint directors

#DifferencebetweenPublicCompanyandPrivateCompany #PubliccompanyvsPrivatecompany

0 views0 comments

Recent Posts

See All

Deferred Shares and No Par Shares

DEFERRED SHARES Deferred Shares are normally issued to the founders of a company. A deferred share is a share that does not have any right to the assets of the company which is undergoing bankruptcy u