Question

Distinguish between: Private Company and Public Company

Answer 1

Sr. No.	Basis of Difference	Private Company	Public Company
1.	Definition	A private company is a company which by its articles restricts the right to transfer its shares, if any, limits the number of its members to 50.	A public company means a company which is not a private company.
2.	Number of Directors	In a Private limited company a minimum number of 2 directors is essential.	In a Public limited company a minimum number of 3 directors is essential.
3.	Transfer of Shares	Shares in private limited company are not transferable.	Public company can invite public for issuing its shares and debentures.
4.	Number of Members	The minimum numbers of members are 2 and maximum 50.	The minimum numbers of members are 7 and there is no maximum limit of members.
5.	Name	It is compulsory to add the word ‘Private Limited’ after the name if the Private Company.	It is compulsory to add the word ‘limited’ after the name of public company.
6.	Issue of Prospectus	It is not compulsory to issue the prospectus and statement in lieu of prospectus.	It is compulsory to issue of prospectus and in the absence of prospectus to sent statement in lieu to the registrar.
7.	Minimum Capital	Minimum paid-up capital is one lakh rupees.	Minimum paid-up capital is five lakh rupees.