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Types of COMPANYS.

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A company can be either a private or a public company. These two types of companies are discussed in detail in the following paragraphs. Private Company A private company means a company which: (a) restricts the right of members to transfer its shares; (b) has a minimum of 2 and a maximum of 50 members, excluding the present and past employees; (c) does not invite public to subscribe to its share capital; and (d) must have a minimum paid up capital of Rs.1 lakh or such higher amount which may be prescribed from time-to-time. It is necessary for a private company to use the word  private limited  after its name. If a private company contravenes any of the aforesaid provisions, it ceases to be a private company and loses all the exemptions and privileges to which it is entitled. 45 The following are some of the  privileges of a private limited company as against a public limited company: 1. A private company can be formed by only two members whereas seven people are needed to form a public company. 2. There is no need to issue a prospectus as public is not invited to subscribe to the shares of a private company. 3. Allotment of shares can be done without receiving the minimum subscription. 4. A private company can start business as soon as it receives the certificate of incorporation. The public company, on the other hand, has to wait for the receipt of certificate of commencement before it can start a business. 5. A private company needs to have only two directors as against the minimum of three directors in the case of a public company. 6. A private company is not required to keep an index of members while the same is necessary in the case of a public company. 7. There is no restriction on the amount of loans to directors in a private company. Therefore, there is no need to take permission from the government for granting the same, as is required in the case of a public company. Public Company A public company means a company which is not a private company. As per the Indian Companies Act, a public cA company can be either a private or a public company. These two types of companies are discussed in detail in the following paragraphs. Private Company A private company means a company which: (a) restricts the right of members to transfer its shares; (b) has a minimum of 2 and a maximum of 50 members, excluding the present and past employees; (c) does not invite public to subscribe to its share capital; and (d) must have a minimum paid up capital of Rs.1 lakh or such higher amount which may be prescribed from time-to-time. It is necessary for a private company to use the word  private limited  after its name. If a private company contravenes any of the aforesaid provisions, it ceases to be a private company and loses all the exemptions and privileges to which it is entitled. 45 The following are some of the  privileges of a private limited company as against a public limited company: 1. A private company can be formed by only two members whereas seven people are needed to form a public company. 2. There is no need to issue a prospectus as public is not invited to subscribe to the shares of a private company. 3. Allotment of shares can be done without receiving the minimum subscription. 4. A private company can start business as soon as it receives the certificate of incorporation. The public company, on the other hand, has to wait for the receipt of certificate of commencement before it can start a business. 5. A private company needs to have only two directors as against the minimum of three directors in the case of a public company. 6. A private company is not required to keep an index of members while the same is necessary in the case of a public company. 7. There is no restriction on the amount of loans to directors in a private company. Therefore, there is no need to take permission from the government for granting the same, as is required in the case of a public company. Public Company A public company means a company which is not a private company. As per the Indian Companies Act, a public company is one which :

(a)has a minimum paid-up capital ofRs. 5 lakhs or a higher amountwhich may be prescribed fromtime-to-time;(b)has a minimum of 7 members andno limit on maximum members;(c)has no restriction on transfer ofshares; and(d)is not prohibited from inviting thepublic to subscribe to its sharecapital or public deposits.A private company which is a subsid-iary of a public company is also treatedas a public company.(a)has a minimum paid-up capital ofRs. 5 lakhs or a higher amountwhich may be prescribed fromtime-to-time;(b)has a minimum of 7 members andno limit on maximum members;(c)has no restriction on transfer ofshares; and(d)is not prohibited from inviting thepublic to subscribe to its sharecapital or public deposits.A private company which is a subsid-iary of a public company is also treatedas a public company.