Distinguish between a private company and a public company.

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Accepted Answer

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> [!TLDR]
> A private company is a closely-held company with membership capped at 50 and restricted share transfer, while a public company can have unlimited members, invite the public to subscribe through a prospectus, and allow free transfer of shares.
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> ## Private Company vs Public Company
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> This distinction is a TS Inter 1st-year Commerce topic on the formation of a company, aligned with the NCERT/CBSE Business Studies treatment of company types.
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> | Basis | Private Company | Public Company |
> |---|---|---|
> | Membership | Minimum 2, maximum 50 | Minimum 7, no maximum limit |
> | Prospectus | Cannot issue a prospectus | Can issue a prospectus to the public |
> | Transfer of shares | Restricted by its articles | Freely transferable |
> | Commencement of business | Can start as soon as it gets its certificate of incorporation | Must also obtain a certificate of commencement of business |
> | Statutory meeting | Not required | Must hold a statutory meeting and file a statutory report |
> | Minimum subscription | Can allot shares without waiting for minimum subscription | Cannot allot shares before minimum subscription is received |
> | Name | Must add 'Private Limited' at the end of its name | Must add 'Limited' at the end of its name | …

Category	Purpose	Examples
Constitutional documents	Define the company's identity, powers, and internal rules	Memorandum of Association, Articles of Association
Procedural documents	Record decisions made by directors or shareholders	Board resolutions, shareholder resolutions, minutes of meetings
Financial documents	Show the company's financial position and performance	Balance sheet, profit & loss account, auditor's report
Statutory registers	Maintain legally required records of key facts	Register of members, register of directors, register of charges
Filing documents	Submitted to the Registrar of Companies to update public records	Annual return, change in directors, alteration of capital
Transactional documents	Govern specific business dealings	Contracts, agreements, share certificates, debenture trust deeds

Q.Distinguish between a private company and a public company.

Concept understanding — Company Law Document

What is a Company Law Document?

The Intuition: Why Documents Matter

The Precise Statement

The Major Categories (with Examples)

Why This Matters for Exams

Private Company vs Public Company

Basis	Private Company	Public Company
Membership	Minimum 2, maximum 50	Minimum 7, no maximum limit
Prospectus	Cannot issue a prospectus	Can issue a prospectus to the public
Transfer of shares	Restricted by its articles	Freely transferable
Commencement of business	Can start as soon as it gets its certificate of incorporation	Must also obtain a certificate of commencement of business
Statutory meeting	Not required	Must hold a statutory meeting and file a statutory report
Minimum subscription	Can allot shares without waiting for minimum subscription	Cannot allot shares before minimum subscription is received
Name	Must add 'Private Limited' at the end of its name	Must add 'Limited' at the end of its name

Q.Distinguish between a private company and a public company.

Private Company vs Public Company

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