Question 15 of 18
Q.Distinguish between a private company and a public company.
Yanam BieapBIEAP AP Intermediate (1st Year) Commerce Board 2023Subjective· 10mImportance★★★★★est
83% · 15/18 Questions
You're viewing a preview — the full solution, concept, methods & PYQ mapping are locked.
Start your 14-day free trial to unlock the full solution →A private company and a public company differ mainly in minimum and maximum membership, number of directors, the right to invite public subscription for shares/debentures, the transferability of shares, and the issue of a prospectus. A private company is a closely held, restricted concern; a public company is a widely held one that may raise capital from the general public.
Distinction between a Private Company and a Public Company
| Basis | Private Company | Public Company |
|---|---|---|
| Minimum members | 2 | 7 |
| Maximum members | 200 (excluding employee-members) | No maximum limit |
| Minimum directors | 2 | 3 |
| Transfer of shares | Restricted by the Articles | Freely transferable |
| Invitation to public | Cannot invite the public to subscribe to its shares or debentures | Can invite the public through a prospectus |
| Issue of prospectus | Not required | Required (or a statement in lieu) when raising capital from the public |
| Name | Must use the words 'Private Limited' | Uses the word 'Limited' |
| Commencement of business | Can start soon after incorporation | Earlier required a certificate of commencement; now needs a declaration before starting |
| Suitability | Suitable for family and small businesses | Suitable for large-scale businesses needing large capital |
| … |
Unlock everything free for 14 days
- Full step-by-step solutions
- Concept-first explanations
- Methods, shortcuts & mistakes
- PYQ mapping + timed mock tests
Full access for 14 days. No credit card required.