DIFFERENCE BETWEEN A PRIVATE COMPANY AND A PUBLIC LIMITED COMPANY COMPANY LAW 2013

• DIFFERENCE BETWEEN A PRIVATE COMPANY AND A PUBLIC LIMITED COMPANY
  COMPANY LAW 2013
• MEANING OF PRIVATE COMPANY
• ACCORDING TO SECTION 2(68) OF THE COMPANIES ACT 2013

1. PRIVATE COMPANY MEANS A COMPANY HAVING MINIMUM PAID UP SHARE CAPITAL AS MAY BE PRESCRIBED AND WHICH BY ITS ARTICLES
2. RESTRICT THE RIGHT TO TRANSFER ITS SHARES
3. EXCEPT IN THE CASE OF ONE PERSON COMPANY THE LIMIT THE NUMBER OF ITS MEMBERS TO 200
4. PROHIBITS ANY INVITATION TO THE PUBLIC TO SUBSCRIBE FOR ANY SECURITIES OF THE COMPANY

• PRIVATE COMPANY

·         PROVIDED FURTHER THAT

• WHERE TWO OR MORE PERSONS HOLD ONE OR MORE SHARES IN A COMPANY JOINTLY,THEY SHALL,FOR THE PURPOSE OF THIS CLAUSE BE TREATED AS A SINGLE MEMBER.

·         PROVIDED FURTHER THAT –

1. PERSONS WHO ARE IN THE EMPLOYMENT OF THE COMPANY
2. PERSONS WHO HAVING BEEN FORMERLY IN THE EMPLOYMENT OF THE COMPANY WERE MEMBERS OF THE COMPANY AND HAVE CONTINUED TO BE MEMBERS AFETER THE EMPLOYMENT CEASED
3. SHALL NOT  BE INCLUDED IN THE NUMBER OF MEMBERS

• PUBLIC COMPANY
• ACCORDING TO SECTION 2(71) OF THE COMPANIES ACT 2013
• PUBLIC COMPANY MEANS A COMPANY WHICH

1. IS NOT A PRIVATE COMPANY
2. HAS A MINIMUM PAID UP SHARE CAPITAL AS MAY BE PRESCRIBED

3.     PROVIDED THAT A COMPANY WHICH IS NOT A SUBSIDIARY OF A COMPANY,NOT BEING A PRIVATE COMPANY,SHALL BE DEEMED TO BE PUBLIC COMPANY FOR THE PURPOSE OF THIS ACT WHEN SUCH SUBSIDIARY COMPANY CONTINUES TO BE A PRIVATE COMPANY IN ITS ARTICLES

• DIFFERENCE BETWEEN PUBLIC LIMITED AND PRIVATE LIMITED
• PUBLIC LIMITED

1. PUBLIC COMPANY MUST HAVE MINIMUM 7 MEMBERS
2. THE MAXIMUM NUMBER IS UNLIMITED
3. CAN NOT ALLOT SHARES UNLESS THE MINIMUM SUBSCRIPTION REACHED
4. HAS TO OBTAIN CERTIFICATE OF COMMENCEMENT FOR COMMENCING ITS BUSINESS

5. REQUIRED LEGALLY TO ISSUE A PROSPECTUS OR A STATEMENT IN LIEU OF PROSPECTUS
6. CAN NOT IMPOSE RESTRICTION ON TRANSFER OF SHARES
7. CAN  ISSUE SHARE WARRANT
8. NOT ALLOWED TO ISSUE DEFERRED SHARES
9. MUST HAVE A SEPARATE INDEX OF MEMBERS
10. MAY OR MAY NOT HAVE ARTICLES OF ASSOCIATION
11. HAVE THE RIGHT TO APPEAL AGAINST THE BOARD OF DIRECTORS IF REFUSE TO REGISTER THEIR TRANSFER OF SHARES
12. CAN NOT ISSUE SHARES WITH DISPROPORTIONATE VOTING RIGHTS
13. MUST HAVE AT LEAST THREE DIRECTORS
14. THE DIRECTORS HAVE TO RETIRE BY ROTATION EVERY YEAR
15. CERTAIN RESTRICTIONS HAVE BEEN IMPOSED BY COMPANY ACT
16. HAS OT FILE THE CONSENT OF THE DIRECTORS OF THE PRIVATE COMPANY
17. NO SUCH PRIVILEGES
18. QUORUM REQUIRED FOR  A MEETING OF THE PUBLIC LIMITED COMPANY IS 5
19. FINANCIAL STATEMENTS ARE OPEN FOR INSPECTION
20. CAN NOT GET FINANCIAL ASSISTANCE FOR THE PURCHASE OF COMPANY’S OWN SHARES

• PRIVATE LIMITED

1. MINIMUM TWO MEMBERS EXCEPT ONE PERSON COMPANY
2. MAXIMUM 200 EXCEPT OPC
3. CAN ALLOT SHARES IMMEDIATELY AFTER THE INCORPORATION
4. CAN COMMENCE ITS BUSINESS AFTER INCORPORATION

5. NOT REQUIRED LEGALLY TO ISSUE PROSPECTUS
6. MUST RESTRICT THE TRANSFER OF SHARES
7. CAN NOT ISSUE SHARE WARRANT
8. CAN ISSUE DEFFERED SHARES
9. NEE NOT HAVE A SEPARATE INDEX OF MEMBERS
10. MUST HAVE ITS OWN ARTICLE OF ASSOCIATION
11. NO RIGHT TO APPEAL
12. CAN ISSUE SHARE WITH DISPROPORTIONATE VOTING RIGHT
13. MUST HAVE AT LEAST TWO DIRECTORS
14. NEED NOT RETIRE BY ROTATION
15. NO RESTRICTION ON THE REMUNERATION OF DIRECTORS OF PRIVATE COMPANY
16. ENJOYS SPECIAL PRIVILEGES
17. QUORUM REQUIRED FOR MEETING IS 2
18. ARE NOT OPEN FOR INSPECTIONS
19. CAN GET FINANCIAL ASSISTANCE FOR THE PURCHASE OF COMPANY’S SHARES

·         MAIN POINT OF DIFFERENCE

·         A PRIVATE COMPANY IS CLOSELY HELD COMPANY AND EXCEPT ONE PERSON COMPANY IT REQUIRES MINIMUM TWO OR MORE PERSON FOR ITS FORMATION BUT PUBLIC LIMITED COMPANY IS OWNED AND TRADED PUBLICLY. IT REQUIRES MINIMUM SEVEN PERSONS

1.     PUBLIC COMPANY IS LISTED ON RECOGNIZED STOCK EXCHANGE AND TRADED PUBLICLY BUT PRIVATE COMPANY IS NOT LISTED ON STOCK EXCHANGE AND IS HELD PRIVATELY BY ITS MEMBERS

2.     AT LEAST 7 MEMBER TO START A PUBLIC COMPANY AND THE PRIVATE COMPANY CAN BE STARTED WITH MINIMUM TWO

3.     NO CEILING ON THE MAXIMUM NUMBER OF MEMBERS IN PUBLIC LIMITED COMPANY BUT PRIVATE COMPANY CAN HAVE MAXIMUM OF 200 MEMBERS SUBJECT TO CERTAIN CONDITIONS

4.     MUST BE AT LEAST 5 MEMBERS PERSONALLY PRESENT AT THE ANNUAL GENERAL MEETING OF THE PUBLIC LIMITED COMPANY AND ON THE OTHER HAND IN CASE OF PRIVATE LIMITED IS 2

5.     THE ISSUE OF PROSPECTUS/STATEMENT INSTEAD OF THE PROSPECTUS IS MANDATORY BUT NOT THE CASE WITH PRIVATE COMPANY

6.     PUBLIC LIMITED COMPANY NEEDS A CERTIFICATE TO COMMENCE THE CERTIFICATE OF BUSINESS BUT PRIVATE LIMITED CAN START ON CERTIFICATE OF INCORPORATION

7.     THE TRANSFER ABILITY OF SHARES OF PRIVATE LIMITED IS COMPLETELY RESTRICTED AND ON THE OTHER HAND A PUBLIC LIMITED CAN FREELY TRANSFER ITS SHARES

8.     A PUBLIC COMPANY CAN INVITE THE GENERAL PUBLIC FOR SUBSCRIBING SHARES OF THE COMPANY. AS OPPOSED A PRIVATE COMPANY HAS NO RIGHT TO INVITE PUBLIC FOR SUBSCRIPTION.