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Distinctions between a Public Company and a Private Company

Main points of difference between a Public Company and a Private Company:-


Public company

Must have minimum paid capital of Rs. 5,00,000/-

Minimum number of members required to form a Public Company is 7

Public Company must have atleast 3 Directors

Public Company cannot start its business until a Certificate to commencement of business is issued to it.

Five members must be present personally to constitute quorum. Articles of Association may provide the number of members more than the required under the Act.

Public Company must call its statutory Meeting and file Statutory Report with the Register of Companies.

No restriction of maximum number of members

Public company is free to invite public for subscription

Public Company is prone to more statutory compliances than Private company

Private Company

Must have minimum paid capital of Rs. 1,00,000/-

Minimum number of members required to form a Private Company is 2

Private Company must have atleast 2 Directors.

A Private Company can commence its business immediately after its incorporation.

The quorum in the case of a Private Company is Two members present personally. Articles of Association may provide the number of members more than the required under the Act.

A Private Company has no obligation to call the Statutory Meeting of the members.

Maximum number is limited to 50

Private company is prohibited from inviting public for subscription of shares.

Private company enjoys privileges over the Public company in terms of statutory compliances.


A Private Company enjoys some special privileges (some are listed above), which are not available to a Public Company.

- A Private Company may allot shares without issuing a prospectus or delivering to the Registrar a statement in lieu of prospectus (S. 70)

- The provisions of S. 81 as regards further issue of capital do not apply.

- Restrictions on the commencement of business contained in Section 149 do not apply.

- One or two members may demand poll (S. 179)

- Restriction on appointment or advertisement of directors contained in Section 266, does not apply.

- Companies of balance-sheet and profit and loss account may be filed separately with the Registrar and no person other than a member of the Company is entitled to inspect the profit and loss account.


 

 
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