Differences between Private companies and Public companies

September 11, 2019



The public company refers to a company that is listed on a recognized stock exchange and traded publicly. A Private Ltd. the company is one that is not listed on a stock exchange and is held privately by the members.
There must be at least seven members to start a public company. As against this, the private company can be started with minimum two members.
There is no ceiling on the maximum number of members in a public company. Conversely, a private company can have a maximum of 200 members, subject to certain conditions.
A public company should have at least three directors whereas the Private Ltd. Company can have a minimum of 2 directors.
It is compulsory to call a statutory general meeting of members, in the case of a public company, whereas there is no such compulsion in the case of a private company.
In a Public Ltd. Company, there must be at least five members, personally present at the Annual General Meeting (AGM) for constituting the requisite least. On the other hand, in the case of a Private Ltd. Company, that number is 2.
The issue of prospectus/statement instead of the prospectus is mandatory in case of a public company, but this is not the case with the private company.
To start a business, the public company needs a certificate of commencement of business after it is incorporated. In contrast, a private company can start its business just after receiving a certificate of incorporation.
The transfer ability of shares of a Pvt. Ltd. company is completely restricted. On the contrary, the shareholders of a public company can freely transfer their shares.
A public company can invite the general public for subscribing shares of the company. As opposed, a private company has no right to invite public for subscription.

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