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Difference between Private and public Companies in India

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Companies may be classified as private companies and public companies.

Private Companies: – A private company is defined as a company by whose Article of Association  states:-

  1. Right to transfer share is prohibited.
  2. Maximum Number of Member is limited to 50
  3. Prohibited public issue of shares. No invitation can be made for public subscription of shares.

Public Companies:  Companies Which are no such restrictions are known as Public companies

Distinction between private and public companies in India

Distinction Between Private And Public Omapnies
SR NO PRIVATE COMAPNIES PUBLIC COMPANIES
1 Minimum Number of Member should be two ( 2) Minimum number of members should be seven ( 7)
2 Maximum Number of Member Should be fifty ( 50) Maximum Number of Members is not limited in case of a Public company.
3 Minimum Paid-up capital must be INR 100000 Minimum Paid-up capital must be INR 500000
4 Minimum Number of Directors are two Minimum Number of directors must have three (3)
5 Private Companies share transfer is not allowed Shares are freely transferable.
6 No need of filing a consent to act as director Consent must be filed with registrar of companies to act as director
7 A private company cannot issue prospectus and invite the public to subscribed for its shares or debentures. Public companies on the other hand is required by the companies act to issue a prospectus or file a statement in lieu of prospectus.
8 No need to sign undertaking for qualification shares Need to sign undertaking for qualification shares.
9 Business can be started immediately after incorporation Starting business is restricted to obtaining certificate of commencement of business.
10 Can issue shares immediately after getting certificate of incorporation Can allot shares only if they are assured of minimum subscription
11 Cannot issue a share warrants against fully paid-up shares Can issue share warrants against fully paid-up shares
12 Need not call statutory meeting of its memebrs It is compulsory to call statutory meeting of members and file a statutory report to Registrar of comapnies
13 The quorum for a meeting is two ( 2) where as Quorum for a meeting is five ( 5)

 

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