Distinction Between Public Company And Private Company

Following are the main differences between public company and private company.

1. Number Of Members

Public company requires minimum seven members and maximum unlimited. Private company needs at least one member for its formation but can not exceed fifty.

2. Issue Of Prospectus

Public company issues a prospectus for inviting public to subscribe its shares or debentures. Private company can not issue prospects to invite public for subscription of its shares or debentures.

3. Restriction On Share Transfer

In public company, there is no restriction on the transfer of shares. In private company, no member is allowed to transfer his/her shares without the consent of the directors of the company.

4. Commencement Of Business

Public company can commence business only after receiving the certificate for the commencement of business. Private company can commence business after getting certificate of incorporation from the Company Registrar.

5. Allotment Of Shares

A public company can allot its shares only after receiving the amount of minimum subscription. A private company can allot its shares as and when directors desire to do so after the incorporation.

6. Statutory Meeting

Statutory meeting must be held and statutory reports must be sent to the Registrar as well as shareholder of the company in public company. It is neither required to hold statutory meeting nor file and issue statutory report in private company.

7. Legal Formalities

A public company has to fulfill more legal formalities. A private company is required to observe a less number of legal formalities.