Private and Public Company: Difference | India | Accounting

The upcoming discussion will update you about the differences between private and public company.

Difference # Private Company:

1. The minimum number of members required to form a company is two.

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2. The maximum number of members must not exceed fifty.

3. It must have two directors.

4. Shares are not freely transferable.

5. It can commence business as soon as certificate of incorporation is obtained.

6. It cannot invite public to subscribe the shares or debentures.

7. It need not hold the statutory meeting or file copy of the statutory report with the Registrar.

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8. It must have the words Private Limited in its name.

9. It must restrict the transferability of its shares by Article.

10. It cannot issue share warrants.

11. There is no legal restrictions on remunera­tion of Directors.

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12. Directors can borrow money from their company.

13. There is no restrictions on allotment of shares.

Difference # Public Company:

1. The minimum number of members required to form a company is seven.

2. There is not such limit on maximum number of members.

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3. It must have three directors.

4. Shares are freely transferable.

5. It cannot start its business on getting certificate of incorporation but can start only after obtaining certificate of commencement of business.

6. It generally approaches public for securing capital by issuing prospectus.

7. It must hold a Statutory meeting and file copy of it with the Registrar.

8. It must have only the word Limited as the last word in its name.

9. It cannot impose such restriction by its Article.

10. It can issue share warrants.

11. There are legal restrictions on remuneration of Directors.

12. No loans to Directors without approval of Central Government.

13. There are a number of legal restrictions on allotment of shares.

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