A company owned by the by the public is known as public company.
It is open for public unlimited shares are distributed in the public that is why it known as public company. It has unlimited members. In public limited company liability is limited to the shareholders.
A company owned and regulate privately is known as private company. It has limited members minimum 2 and maximum 50. Its shares are not offered to the public. Liability is unlimited in private company.
DIFFERENCEs BETWEEN PRIVATE AND PUBLIC COMPANY
On the basis of Public company Private company
ownership Owned publicly Owned by private people
Number of members The minimum number of members is 7 and maximum unlimited members are there in public company Minimum 2 members and maximum 50 members are there in private company
Transfer of shares It is very easy to transfer the shares in public limited company It is not so easy to transfer the shares.
It is difficult to transfer in private limited company
Issue of prospectus Public limited company issues a prospectus to invite the general public to be the member of the company
Private limited company do not issue the prospectus to invite the public because there is limited number of members up to 50
Number of directors There should be at least 3 directors in a public limited company There should be at least 2 directors in private limited company
Filing of documents It is very essential to file all the documents from the very first day of the company because it is a large company having large capital and unlimited number of members.
So documentation is necessary in public limited company
It is not so important to file all the documents. If company is do filling of documents it’s good but it is not necessary to filing of documentation
Sending of annual accounts
It is compulsory to disclose the financial statements of the company to the general public such as balance sheet and income statement
It is not compulsory in private limited company to disclose the financial statements of the company
Qualification of auditors, Auditor should be qualified and registered.
He must be C.A It is not necessary in private company to have an auditor CA qualified.
Capital Minimum capital in a public limited company should be 500000 Minimum capital must not be less than 100000 in a private limited company