Difference Between Public Company and Private Company?

Distinction Between A Public Company And a Private Company Following are the main points of difference between a Public Company and a Private Company :1. Minimum Paid-up Capital : A company to be Incorporated as a Private Company must have a minimum paid-up capital of Rs. 1,00,000, whereas a Public Company must have a minimum paid-up capital of Rs. 5,00,000. 2. Minimum number of members : Minimum number of members required to form a private company is 2, whereas a Public Company requires atleast 7 members. 3. Maximum number of members : Maximum number of members in a Private Company is restricted to 50, there is no restriction of maximum number of members in a Public Company. 4. Transerferability of shares : There is complete restriction on the transferability of the shares of a Private Company through its Articles of Association , whereas there is no restriction on the transferability of the shares of a Public company 5 .Issue of Prospectus : A Private Company is prohibited from inviting the public for subscription of its shares, i.e. a Private Company cannot issue Prospectus, whereas a Public Company is free to invite public for subscription i.e., a Public Company can issue a Prospectus. 6. Number of Directors : A Private Company may have 2 directors to manage the affairs of the company, whereas a Public Company must have atleast 3 directors. 7. Consent of the directors : There is no need to give the consent by the directors of a Private Company, whereas the Directors of a Public Company must have file with the Registrar a consent to act as Director of the company. 8. Qualification shares : The Directors of a Private Company need not sign an undertaking to acquire the qualification shares, whereas the Directors of a Public Company are required to sign an undertaking to acquire the qualification shares of the public Company .

9. Commencement of Business : A Private Company can commence its business immediately after its incorporation, whereas a Private Company cannot start its business until a Certificate to commencement of business is issued to it. 10. Shares Warrants : A Private Company cannot issue Share Warrants against its fully paid shares, Whereas a Private Company can issue Share Warrants against its fully paid up shares. 11. Further issue of shares : A Private Company need not offer the further issue of shares to its

existing share holders, whereas a Public Company has to offer the further issue of shares to its existing share holders as right shares. Further issue of shares can only be offer to the general public with the approval of the existing share holders in the general meeting of the share holders only. 12. Statutory meeting : A Private Company has no obligation to call the Statutory Meeting of the member, whereas of Public Company must call its statutory Meeting and file Statutory Report with the Register of Companies. 13. Quorum : The quorum in the case of a Private Company is TWO members present personally, whereas in the case of a Public Company FIVE members must be present personally to constitute quorum. However, the Articles of Association may provide and number of members more than the required under the Act. 14. Managerial remuneration : Total managerial remuneration in the case of a Public Company cannot exceed 11% of the net profits, and in case of inadequate profits a maximum of Rs. 87,500 can be paid. Whereas these restrictions do not apply on a Private Company. 15. Special privileges : A Private Company enjoys some special privileges, which are not available to a Public Company.
PRIVATE LIMITED COMPANy (LTD): Differences: Private Firm Grown in the last 25 years objectives are mainly centred on profit and growth Shares cannot be offered to the general public, so restricting availability of finance, especially if the business wants to expand. Minimum of 7 shareholders no maximum. Cannot raise money by selling shares on the stock market.

Similarities: Limited Liability Separate legal entity Corporation tax is paid on profits Finance raised through sale of shares Financial information available to share holders, public and especially Insolvency when unable to pay debts

Competitors.

PUBLIC LIMITED COMPANY (PLC): Differences: Owned by the government.

(Health, Education, Police, etc)

To trade they must have at least 50,000 worth of shares issued and at least 25% of them have to be paid up, in order for them to carry on business and borrow money from banks etc. Main objective is to provide a good service. Money is provided by the government through taxes that we pay. Limited to fifty members but no less that two. Can raise money by selling shares on the stock market.

SOLE TRADER
The sole proprietorship means the business unit ownership & management is under control of one person. The sole trader is also called sole proprietorship or one man business. In sole trader the owner is not only the owner the all capital but also take all profit or loss responsibility. In sole trader the owner has unlimited liability. In law, the sole trader & the business are considered as one. In sole proprietorship no legal formalities are requires for formation & dissolve of business.

PARTNERSHIP
The partnership is the relationship between two to fifty persons who agree to run a common business with the view to earn the profit. The partnership act 1932 of Pakistan clearly mention that in banking business the partner must be between 2 to 10 & in limited partnership the no of member are 2 to 50 are required. All partner share profit & loss according to the partnership agreement. For forming the partnership requires the partnership deed on which all partner must signature agree upon it.

LIMITED COMPANY
A company which is formed and registered under the companies ordinance 1948 of Pakistan is know as a registered company. The companies' ordinance provides registration of the following two types of companies. Company limited by shares Company limited by guarantee. In company limited by shares is the most important and popular among the registed companies. It is a company which keeps the liability of its members limited up to the value of the shares purchased by them. It's further divided into private company & public company. In company limited by guarantee is the company in which the liability of its members is limited up to the amounts guarantee by each members at the time of winding up to company. This type of company is form mostly when work is of non profit making nature. They are further divided into two types in which one is share capital while other is not share capital. All of the above three type of business according to the company ordinance of 1938 of Pakistan the limited company need the license for running the business.