GROUPNO:7

BUSINESS LAW

PRESENTATIONBY

TOPIC:

PRIVATE COMPANY V/S

PUBLIC COMPANY

A private company is the one which has a minimum paid up share capital of Rs. 100000 or such higher capital as prescribed by the Companies Act. Its Article of association mentions that the company restricts the right to transfer its shares; limits the number of its members from 2 to 50.

public company means a company which is not a private company and has minimum of 7 shareholders/subscribers. It has to have a minimum paid-up share capital of Rs. 5 Lakh.

The minimum number of persons required to form a ‘ public company is seven whereas in a private company it is only two.

There is no maximum limit on the members of a public company but a private company cannot have more than 50 members excluding employees and ex-employees of the company.

A public company can commence its business only after getting the certificate of commencement of business. But a private company can commence its business as soon as it is incorporated.

There is no restriction on the transfer of shares in the case of a public company whereas the articles of a private company must restrict its right to transfer its shares.

Total managerial remuneration in the case of a public company cannot exceed 11% of the net profits but in the case of inadequacy of profits a minimum of? 50,000 can be paid. These restrictions do not apply to a private company.

A public company must hold a statutory meeting and file with the Registrar a statutory report. But a private company has no such obligations.

If the articles of a company do not otherwise provide five members personally present in the case of a public company are quorum for a meeting of the company. It is two in the case of a private company.

A public company can issue share warrants but such a right is denied to a private company.

A public company must have at least three directors whereas a private company must have at least two directors.

The name of a public company must end with the word, “limited” But in the case of a private company the word private limited must be used at the end of the name.

A director of a public company shall file with the Registrar consent to act as a director or sign the memorandum of association or enter into a contract for their qualification shares. The directors of a private company need not do so.

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