Difference between Public Company and Private Company

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-

  • restricts the transfer of shares by its members
  • 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 COMPANY
It can be started with a Minimum Paid up Capital of Rs. 1 lakhsIts Minimum Paid up Capital requirement is Rs. 5 lakhs
Minimum number of Members – 2 membersMinimum number of Members – 7 members
Max. number of members – 200 members excluding employed membersMax. number of members – No limit
Min. number of directors – At least 2At least 3
Transferablity 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 freely
Public subscription is restrictedThey can invite public for subscription
Acceptance of public deposits – The articles prohibit a private company from accepting deposits.A public company can accept deposits from public
Commencement of business – It can Commence its business immediately after getting the certificate of incorporationIt can only commence business after getting certificate of commencement of business
Issue of prospectus – Not compulsoryCompulsory
Statutory meeting – Not requiredIt must hold a statutory meeting after one month or before 6 months from the date of obtained certificate of commencement of business
Managerial remuneration not fixedFixed at 11% of annual net profits
Index of members is not requiredIt is required
Provisions regarding directors – It is free to appoint directorsIt requires the prior approval of Central Govt. to appoint directors

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gurpreet kaur

all notes plz provide