Question 17 of 18
Q.Distinguish between a Private Company and Public Company.
Yanam BieapBIEAP AP Intermediate (1st Year) Commerce Board 2024Subjective· 10mImportance★★★★★est
94% · 17/18 Questions
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Start your 14-day free trial to unlock the full solution →A private company (Pvt Ltd) restricts share transfer, limits membership to 200, needs 2 members and 2 directors and cannot approach the public for funds. A public company (Ltd) allows free transfer of shares, needs a minimum of 7 members with no upper limit and 3 directors, and can raise capital from the public by issuing a prospectus.
The following table brings out the main points of difference, as expected in the AP Intermediate 1st-year Commerce Paper-I.
| Basis | Private Company | Public Company |
|---|---|---|
| Minimum members | 2 | 7 |
| Maximum members | 200 (except OPC) | No limit |
| Minimum directors | 2 | 3 |
| Transfer of shares | Restricted by the Articles | Freely transferable |
| Invitation to public | Cannot invite the public to buy shares/debentures | Can invite the public through a prospectus |
| Name ending | 'Private Limited' | 'Limited' |
| Prospectus | Need not issue a prospectus | Must issue a prospectus or a statement in lieu |
| Commencement of business | Can start soon after incorporation | Must also satisfy the capital / declaration requirement |
| Suitability | Small and family-controlled concerns | Large-scale businesses needing huge capital |
| … |
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