Question

Distinguish between Private Company  and Public Company.

Answer 1

Sr. No.	Basis of Difference	Private Company	Public Company
1.	Definition	As per Section 2(68) of the Companies Act, 2013, a private company is one which, by its Articles of Association, restricts the right to transfer its shares, limits the number of its members to 200, and prohibits any invitation to the public to subscribe for its shares or debentures.	As per Section 2(71) of the Companies Act, 2013, a public company is one which is not a private company and has a minimum paid-up share capital as may be prescribed. It can invite the public to subscribe for its shares or debentures.
2.	Minimum Number of Directors	A private limited company must have a minimum of 2 directors.	A public limited company must have a minimum of 3 directors.
3.	Transfer of Shares	The transfer of shares is restricted by its Articles of Association.	The transfer of shares is freely allowed.
4.	Number of Members	Minimum 2 and maximum 200 members.	Minimum 7 members and no maximum limit of members.
5.	Name	The name of a private company must end with the words “Private Limited”.	The name of a public company must end with the word “Limited”.
6.	Issue of Prospectus	A private company cannot invite the public to subscribe for its shares; hence, it is not required to issue a prospectus.	A public company can invite the public to subscribe for its shares and is therefore required to issue a prospectus or a statement in lieu of a prospectus.
7.	Minimum Paid-up Capital	There is no minimum paid-up capital requirement (earlier ₹1 lakh).	There is no minimum paid-up capital requirement (earlier ₹5 lakh).