Distinction between private and public company

Distinction between private and public company. Following are the main points of distinction between a private and a public company:

            1.  In the case of a private company minimum number of persons to form a company is two while it is seven in the case of a public company.

   2.  In case of a private company the maximum number of members must not exceed fifty whereas there is no such restriction on the maximum number of members in case of a public company.

    3.  In private company the right to transfer shares is restricted, whereas in case of public company the shares are freely transferable.

  4.  A private company cannot issue a prospectus, while a public company may, through prospectus, invite the general public to subscribe for its shares or debentures.
5.  A private company can commence business immediately after receiving the certificate of incorporation, while a public company can commence business only when it receives a certificate to commence business from the Registrar.

  6.  A private company need not hold a statutory meeting but a public company must hold a statutory meeting and file a statutory report with the Registrar.

 7.  The directors of a private company are nor required to file with the Registrar written consent to act as directors or sign the memorandum of association or enter into a contract for their qualification shares. But the directors of a public company must file with the Registrar their written consent to act as directors, must sign the memorandum and must enter into a contract for their qualification shares.

8.  Directors of a private company may be appointed by a single resolution, but it is not so in case of a public company.

9.  Directors of a private company are not required to retire by rotation, but in case of a public company, at least two-third of the directors must retire by rotation.

10.  The number of directors in a private company may be increased to any extent without the permission of the Central Government, but in case of a public company if the number of directors is to be more than twelve than the approval of the Central Government is necessary.

11.  Two members have to be personally present to from the quorum in a private company but in a public company this number is five members.

12.  In a private company, there are no restrictions on managerial remuneration.

13.  In addition to the above, a private company enjoys some special privileges. A public company enjoys no such privileges.

14.  A private company cannot issue share warrants.