Question

Distinguish between the following:

Private Company and Public Company.

Answer 1

Private company	Public company
A private company is the one which restricts the rights of its members to transfer shares, limits the maximum number of members to 50 and prohibits an invitation to public to subscribe to its shares and debentures.	A public company is the one which does not restrict the right of its members to transfer shares, does not limit its membership to 50 and can invite the public to subscribe to its shares and debentures.
A private company must have at least 2 directors.	A public company must have a minimum 3 directors.
In a private company, transferability of shares is restricted by its articles.	In case of public company, shares are freely transferable and usually quoted on a Stock Exchange.
The minimum number of members is 2 While the maximum number of members is 200 in a private company.	The minimum number of members is 7 while there is no limit to the maximum number of members in a public company.
A private company is required to add the word ‘Private Limited’ after its name.	A public company is required to add the word ‘Limited’ after its name.
A private company is required to raise a minimum amount of paid-up share capital of 1 lakh.	A public company is required to raise a minimum amount of paid-up share capital of 5 lakh.