Before understanding the Difference between Public and Private Company, we should understand the both concepts.
PUBLIC COMPANY
Public Company is the company which can be incorporated with zero paid up capital as per the Companies Act (Amendment), 2015.This is the company which can start its business with minimum 7 members. Public company has to get registered with the Registrar of companies and required to obtain the Certificate of Incorporation and Certificate of Commencement to start its business. The public company raise its capital by issuing the shares to the public.
PRIVATE COMPANY
Private Company is the company which can be incorporated with zero paid up capital as per the Companies Act (Amendment), 2015.This is the company which can start its business with minimum 2 members. Private company has to get registered with the Registrar of companies and required to obtain the Certificate of Incorporation to start its business.
DIFFERENCE BETWEEN PUBLIC AND PRIVATE COMPANY
| BASIS OF DIFFERENCE | PRIVATE COMPANY | PUBLIC COMPANY |
| NUMBER OF MEMBERS | Minimum number of members is 2 and the maximum, exclusive of past and present employees is 200 | Minimum number of members is 7 and there is no limit to maximum number. |
| INVITATION TO PUBLIC | It cannot invite the public to subscribe to its shares. | It can invite the public to subscribe to its shares. |
| TRANSFER OF SHARES | There is restriction on the transfer of its shares. | There is no restriction on the transfer of its shares. |
| PREPARATION OF ARTICLES | Preparation of Articles is mandatory for all the private companies. | Preparation of Articles is not mandatory. In case the Articles are not registered, the provisions of Table F of Schedule I given in the Companies Act 2013 shall apply. |
| NUMBEROF DIRECTORS | It must have at least two directors. | It must have at least three directors. |
| STATUTORY MEETING | It is not required to hold the statutory meeting. | It is required to hold statutory meeting within 6 months of its getting the Certificate of Commencement of the business. |
| USE OF WORD ‘LIMITED’ | It is compulsory to use the words ‘Private Limited’ at the end of its name. | Only the word ‘Limited’ is used at the end of its name. |
| PROSPECTUS | A private company cannot issue prospectus or statement in lieu of prospectus. | A public company must issue the prospectus or statement in lieu of prospectus. |
| MINIMUM SUBSCRIPTION | A private company can allot the shares to its shareholders immediately after its registration. The condition of minimum subscription does not apply to it. | A public company cannot make allotment of shares till the condition of minimum subscription is complied with. |
| COMMENCEMENT OF BUSINESS | A private company can commence business immediately after the registration with the registrar. | A public company cannot start business without getting the certificate of commencement of business. |
| QUORUM | Only two members are required to complete a quorum of the private company. | In public companies, minimum 5 members constitute the quorum. |
| SHARE WARRANTS | Share warrants cannot be issued by private company. | A public company can issue the shares warrant. |