The difference between Private Company and Public Company
The following differences between a private company and a public company can be drawn:
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Private Company
- It’s minimum number of persons is two and the maximum is 50.
- It makes the use of private limited after its name.
- It can commence its business operation after getting certificate of incorporation.
- The memorandum of association and the articles of association is signed by at least two persons.
- The filling of both memorandum and article of association is obligatory.
- It does not require the filling of the prospectus or statement-in-lieu of prospectus.
- It cannot sell shares to the general public in the open market.
- Transfer of share is restricted in the articles of association.
- There are of least two directors and they need not retire by rotation.
- There is no legal restriction on director’s remuneration.
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Public Company
- It’s minimum number of persons is seven and the maximum is unlimited.
- It makes the use of the word limited after the name.
- It requires both the certificate of incorporation and the certificate of commencement for its commencement.
- It’s memorandum and articles of association is signed by at least seven persons.
- It may not have its own articles of association because it may adopt table ‘A’.
- It must file prospectus or statement in lieu of prospectus before allotment of shares.
- it sell shares to the general public in the open market.
- Transfer of shares is not restricted and as such shares are freely transferable and are quoted in the stock exchange.
- it has at least 3 directors and they are subject to retire by rotation.
- The directors cannot draw remuneration more than 11 percent of the net profit of the company.