Difference between private company & public company

1. GROUP NO: 7 BUSINESS LAW PRESENTATION BY

2. TOPIC: PRIVATE COMPANY V/S PUBLIC COMPANY

3. A private company is the one which has a minimum paid up share capital of Rs . 100000 or such higher capital as prescribed by the Companies Act. Its Article of association mentions that the company restricts the right to transfer its shares; limits the number of its members from 2 to 50 . public company means a company which is not a private company and has minimum of 7 shareholders/subscribers. It has to have a minimum paid-up share capital of Rs . 5 Lakh. The minimum number of persons required to form a ‘ public company is seven whereas in a private company it is only two . There is no maximum limit on the members of a public company but a private company cannot have more than 50 members excluding employees and ex-employees of the company.

4. A public company can commence its business only after getting the certificate of commencement of business. But a private company can commence its business as soon as it is incorporated. There is no restriction on the transfer of shares in the case of a public company whereas the articles of a private company must restrict its right to transfer its shares. Total managerial remuneration in the case of a public company cannot exceed 11% of the net profits but in the case of inadequacy of profits a minimum of? 50,000 can be paid. These restrictions do not apply to a private company.

5. A public company must hold a statutory meeting and file with the Registrar a statutory report. But a private company has no such obligations. If the articles of a company do not otherwise provide five members personally present in the case of a public company are quorum for a meeting of the company. It is two in the case of a private company. A public company can issue share warrants but such a right is denied to a private company.

6. A public company must have at least three directors whereas a private company must have at least two directors. The name of a public company must end with the word, “limited” But in the case of a private company the word private limited must be used at the end of the name. A director of a public company shall file with the Registrar consent to act as a director or sign the memorandum of association or enter into a contract for their qualification shares. The directors of a private company need not do so.

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