Differences Between Public and Private Company.Public and private companies have several differences in terms of ownership, management, financial reporting, and regulation. Here are some of the key differences:
5 Differences Between Public and Private Company
Following are the main features of private limited company.
- The maximum number of members is 50 and minimum number of members is 2.
- It can not issue shares to general public
- Its members cannot transfer their shares
- These companies must use the word Private Limited (PVT. Ltd) as a part of its name
Public Limited Company:
- The minimum number of members is 7 there is no maximum limit.
- It can issue shares to general public.
- Its members can transfer their shares.
These companies must use the word Limited (Ltd) as a part of their name.
| Public Company | Private Company | |
| NUMBER OF MEMBERS | ||
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There must be seven members for formation of a public company. There is no maximum limit over the number of members . |
There must be at least two members to form a private company. The maximum limit is 50. | |
| SALES OF SHARES
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Public Ltd. Company can sell its shares to public. |
Private Ltd. Company cannot sell its shares to public. | |
| TRANSFER OF SHARES | ||
| The shares of public limited company can be transferred easily. | The shares of private limited are not transferable . | |
| COMMENCEMENT OF BUSINESS | ||
| Public company has to get
certificate of commencement to start its business. |
Private company can start its business after obtaining certificate of incorporation. | |
| MANAGEMENT | ||
| In public company shareholders elect the management by voting . | In private company owner run the management. | |
| SIZE | ||
| Public company is suitable for large scale business . | Private company is suitable for medium and large scale business. | |
| LOAN | ||
| Public company cannot obtain loan after its incorporation |
Private company can obtain loan i after Its incorporation. |
|
| LEGAL RESTRICTIONS | ||
| Tiblic company has to follow strict legal restriction. | Private company has to face less legal restrictions compared to ! public company | |
| LIST OF STOCK EXCHANGE | |
| Public company can be listed in stock exchange | Private limited company cannot be ! listed in stock exchange |
| QUORUM | |
| In directors meetings the minimum number of directors in four or one third | In directors meeting the minimum j number of directors is two
|
| ALLOTMENT OF SHARES
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| In public company there is a restriction of minimum
subscription for allotment of shares. |
There is no restriction on private ‘company for allotment of shares |
| PROSPECTUS | |
| It is compulsory for public company to issue prospectus after obtainingcertificate of
incorporation. |
Incase of private company there is no restriction for issue of prospectus.
|
| PUBLICATION | |
| Public company must publish its annual performance report. | There is no restriction for publication of annual report. |
| DIRECTORS | |
| There must be at least seven directors to manage business affairs. | There must be at least two ; directors in private company.
|
| STATUTORY MEETINGS | |
| It is compulsory for public company to hold statutory meeting. | There is no compulsion for private company to call statutory’ meeting. |
|
WRITTEN CONSENT OF DIRECTORS |
|
| In public company, directors have to give consent that they arc ready | The directors of private company ‘ arc not required to given their |
| to act as directors. | consent. |
| TITLE | |
| Every company public company must use the word “Limited” after its name. | Private company has to mention word “Private Limited” with its name. |
| PROMOTERS | |
| In public company, there must be at least seven promoters. | There must be at least two promoter in case of private company. |
| SECRECY | |
| Public company has to publish the account in newspaper, so there is le*ss chance of secrecy in public company . | Private company has more secrecy as compare to public limited company. There is no condition of publish of accounts. |
| AUDIT | |
| Audit of account is required by public limited company. | There is no need of Audit in private limited company. |
| POWERS | |
| The powers of directors are so wide under articles of association. | The powers of directors are not so wide as that of public company. |