Type of Company
We can classify the company on several bases but the following are the main types of companies
- Limited Liability Companies
- Unlimited Liability Companies
- Private Companies
- Public Companies
- Incorporated Companies
- 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. |