9 Difference between Private and Public Company

The private and public company are the two types of the company which are mostly known by the general population. A company is a group of members of more than two who comes together to achieve the same goal. A private company is a company that is not listed under the stock exchange simply means a private company doesn’t share its company shares with the general public. A private company can be identified with the suffix of the name of the company. In the name of the private company Pvt. Ltd is mentioned. While a public company is listed on the stock exchange. Simply means which company’s shares are available on the stock market all are public companies.

Difference Between Private and Public Company

1. A private company is a company that is not listed under the stock exchange simply means a private company doesn’t share its company shares with the general public.
2. While a public company is listed on the stock exchange. Simply means which company’s shares are available on the stock market all are public companies.

These days everyone wants to start their own business. To start a business a registered company is needed. So that person should have complete knowledge of the private and public companies. In this article, we will discuss in detail private and public company. There are many terms and aspects which are related to private and public company. All the related aspects and differences between private and public company will be discussed here.

Private company vs Public Company

Sr. No.	Private Company	Public Company
1	Not registered in the stock exchange	Registered in the stock exchange
2	Unable to offer their shares to the general public	Free to offer shares to the normal people
3	The share transfer is restricted	Shares are easily transferred.
4	The minimum number of directors for a private company is 2 and the maximum is 15(conditions apply)	The minimum number of directors for a public company is 3 and the maximum is 15 (conditions apply)
5	The minimum shareholder for private companies is 2	The minimum number of shareholders for public companies is 7.
6	The maximum number of shareholders is 200	The maximum number of shareholders is unlimited.
7	Annual general meetings are not compulsory	The annual general meeting is compulsory
8	Directors are not retired by the rotation	Directors of a public company is retired by the rotation
9	Balance sheet and other documents are not essential	Balance sheet and other documents are properly prepared
10	The size of management and the company is less	The size of management and company is more

Private company

A company that is registered private company as per the guidelines of the Companies Act, 2013 is known as a private company. In simple words, a private company is not registered or comes under a well-known stock exchange. Simply means private company unable to get money from the general people through shares and debentures. Private companies share and debentures are secretly held by the private investigator or members.

The transfer of the shares of the private company is restricted. These shares are only transfers between the members of the company. In private company members are limited only two hundred members are allowed. Joint holders in the private company consider single members. Prospectors of the private company are not published. For a private company minimum requirement of the members is 2. The private company easily starts its business by receiving the certificate. No need for many legal formalities is required for the private company formation. In private company annual meeting is not much compulsory. For a private company, it’s not compulsory to show a balance sheet

Requirements for a private company

1. Minimum 2 adults as director.
2. Minimum 2 members as shareholder.
3. One director should be Indian.

Public Company

The company which are registered under the well-known stock exchange is known as the public company. All the companies which we see on nifty and Sensex are public companies. These public companies are generally identified by their name suffixes which are written as XYZ limited. To make a public company minimum of 3 directors are needed. The minimum number of members or shareholders for a public company is seven. A public company is considered in the Companies Act, of 2013.

The main motive for the formation of the public company is to generate or collect money from the general public through shares and debentures. Public companies’ liabilities remain limited. A registered office is a must for public companies. Proper balances sheet, employee details, and other documents are prepared by the public company. These documents are required for the shareholders.

Proper audits are done of the public companies. In a public company, all legal formalities according to the law are compulsory. To become a director of the public company a consent file is required from that person. The annual general meeting is a must. All the work is done properly and fairly in the public company. When a private company became bigger or need more money the case private company became a public company with some legal formalities or completing the required parameters for the public company.

Requirements to form a public company

1. Minimum directors 3 needed.
2. Minimum of 7 members or shares holder needed.
3. A registered office.
4. Digital signature certificate
5. Director identification number
6. Copies of identity proofs.

The main difference between private and public company

1. Private companies not registered under the stock exchange. Public companies are registered in the stock exchange.
2. Private companies are unable to offer their shares to the general public. Public company is free to offers shares to the normal peoples.
3. The share transfer is restricted in a private company. In public company shares are easily transferred.
4. A minimum number of directors for a private company is 2 and a maximum of 15(conditions apply). The minimum number of directors for a public company is 3 and maximum is 15 (conditions apply)
5. The minimum shareholder for private companies is 2 and the minimum shareholder for a public company is 7.
6. The maximum number of shareholders for a private company is 200 while the maximum number of shareholders for a private company is unlimited.
7. A private company is able to allot shares before achieving a minimum subscription. While public company alloys share after the completion minimum subscription which is mentioned in the prospectus.
8. Private companies don’t issue prospectus for shares. The public company issues the prospectus for the shares.
9. Annual general meetings are not compulsory in private companies. Annual general meeting is compulsory for public companies.
10. In a private company, a consent file is not required to be a director of the company. The consent file of the person is required to become a director of the private company.
11. Directors of a public company are retired by the rotation. Director are not retired by the rotation in the private company.
12. Balance sheet and other documents are properly prepared in public company. While balance sheet and other documents are not essential for the private company.
13. A private company is more flexible than a public company.
14. The size of management and company is more in public companies. The size of management and company is less in private companies.

Conclusion

These days many small and big companies are formed. The company which registered in the stock market is known as the public company. And the companies which are not registered in the stock market is terms as the private company. Both private and public company have their own merits and demerit. The private company became bigger and need more money transferred to the public company.

This is all about private and public company. We hope this article will clear your doubts about a private and public company. If any doubt remains please feel free to comment on us. For more interesting topics like this please go through our differenceebetween.