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What are the difference between Private Company and Public Company?

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.
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