Different Between Private Company and Public Company

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Different Between Private Company and Public Company

By | April 2013
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* The distinction between a public company and a private company are explained in the following manner: 1. Minimum number of members
The minimum number of person required to form a public company is seven, whereas in a private company their number is only two. 2. Maximum number of members
There is no limit on the maximum number of member of a public company, but a private company cannot have more than fifty members excluding past and present employees. 3. Commencement of Business
A private company can commence its business as soon as it is incorporated. But a public company shall not commence its business immediately unless it has been granted the certificate of commencement of business. 4. Invitation to public

A public company by issuing a prospectus may invite public to subscribe to its shares whereas a private company cannot extend such invitation to the public. 5. Transferability of shares
There is no restriction on the transfer of share In the case of public company whereas a private company by its articles must restrict the right of members to transfer the share. 6. Number of Directors

A public company must have at least three directors whereas a private company may have two directors. 7. Statutory Meeting
A public company must hold a statutory meeting and file with the register a statutory report. But in a private company there are no such obligations. 8. Restrictions on the appointment of Directors

A director of a public company shall file with the register a consent to act as such. He shall sign the memorandum and enter into a contact for qualification shares. He cannot vote or take part in the discussion on a contract in which he is interested. Two-thirds of the directors of a public company must retire by rotation. These restrictions do not apply to a private company. 9. Managerial Remuneration

Total managerial remuneration in the case of public company cannot exceed 11% of net profits, but in the case of inadequacy of profit a minimum of Rs....
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