Difference between Public Company and Private Company
Basis | Public Company | Private Company |
|---|---|---|
| Meaning | A public limited company means a company that is listed on a recognised stock exchange and whose shares are publicly traded. | A private limited company refers to a company that is not listed on a stock exchange and the shares are held privately by the members concerned. |
| Number of Members | Minimum 7 and there is no limit for Maximum members. | Minimum 2 and Maximum 200 members. |
| Articles of Association | It can draw up its own articles of association or adopt Schedule F. | They must draw up their own articles of association. |
| Transfer of shares | The shares of a publicly traded company are freely transferable, i.e., freely tradable in an open market called the stock exchange. | Shares of a private company are not freely transferable, as the articles of association contain restrictions. |
| Public subscriptions | It may invite the public to subscribe for its shares or bonds. | Issuance of shares or bonds to the public is prohibited. |
| Issuing a prospectus | It may issue a prospectus or may opt for a private placement. | Issuing a prospectus is prohibited. |
| Minimum allotment amount | The company cannot issue shares unless it reaches the minimum subscription specified in the prospectus. | The company may allot shares without obtaining a minimum subscription. |
| Starting a business | After incorporation, it requires a certificate of commencement of business. | You can start a business immediately after receiving an extract from the commercial register. |
| Appointment of director | One director may be appointed by one resolution. | Two or more directors may be appointed by one resolution. |
| Statutory meeting | Statutory meeting is mandatory | Statutory meeting is optional. |
| Use of suffix | A public company must compulsorily include the words “Limited” in its name. | A private company must include “Private Limited” as a suffix in its name. |
| Disclosing reports to the public | A public company must compulsorily issue quarterly and annual financial statements to the public. | A private company does not have to disclose its financial results to the public. |