Question

Distinguish between public and private company on the basis of the following:

a. Number of members

b. Prospectus

c. Number of directors

d. Transfer of shares e. Minimum paid up capital

Answer 1

| Basis of difference | Public company | Private company |
| a) Number of members | Minimum number of member required to form a public company is seven and no limit on maximum members. | Minimum number of persons required to form a private company is two members Maximum fifty members |
| b)Prospectus | Compulsory to issue a prospectus. | Not necessary to issue prospectus. |
| c) Number of directors | Minimum three directors. | Minimum two directors |
| d) Transfer of shares | Freely transferable | Prior permission is required for transfer of shares. |
| e) Minimum paid up capital | Minimum paid up capital must be Five lakhs | Minimum paid capital must be One lakh |