Private Company and Public Company – A Comparision

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Type of Company

We can classify the company on several bases but the following are the main types of companies

  1. Limited Liability Companies
  2. Unlimited Liability Companies
  3. Private Companies
  4. Public Companies
  5. Incorporated Companies
  6. Unincorporated Companies

Basis of Difference Private Company Public Company
Number of Members Minimum of 2 and according to the new Companies Act 2013 maximum Of 200 members. Minimum of 7 and there is no limit for maximum members.
Articles of Association It is mandatory to make an Articles of association. Preparation of articles of association is not compulsory for a company. According to the Companies Act 2013, if articles are not prepared, the rules of Table F to Table J will be applicable.
Commencement of Business It can start its business soon after incorporation. It cannot start its business until it gets a certificate from the government to start the same.
Issue of Shares A private company cannot make an offer to the public for buying its shares and debentures. It is mandatory in the case of a public company to issue its shares and debentures to the public.
Allotment of Shares It can allot shares soon after its incorporation. It cannot allot shares until it receives a minimum subscription.
Statutory Meeting It is not necessary for a private company to call a statutory meeting and file a statutory report. It is mandatory in case of a public company to call a statutory meeting and file a statutory report according to the law.
Transfer of Shares There is always a restriction on the transfer of shares as per the Articles of Association. Shares can be freely transferred from one person to another.
Appointment of Managing Directors There is no restriction in the appointment and the remunerations allowed to managing directors. There are many restrictions in the appointment of Directors and the remunerations allowed to managing directors under the Indian Company’s Act 2013.
Issue of Prospectus It cannot issue a prospectus neither it files a substitute of prospectus. It is mandatory to issue a prospectus. In the absence of a prospectus, it will publish a substitute prospectus.
Loan to Directors It is not necessary to take any permission from the government of India to issue a loan to the directors of a company. It is a must to take permission from the government of India before allowing any loan to the directors of a company
Report to Registrar Report of the list of directors and their consensus is not mandatory to be sent to the registrar. It is mandatory to send a report of the list of directors and their consensus to the registrar.
Number of Directors It has at least two directors who are not liable for their retirement by rotation. It has a minimum of three directors and they get retired one by one.
Name It is a must for a Private Company to add the word ‘Private’ with its name. It is not mandatory to add the word ‘Public’ with the name of a Public Limited Company.

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