private company vs public company

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GhazipurPresentation on-

Public & Private Company as perThe Companies Act, 1956 .

Presented By-Devesh SrivastavaB.B.A III Sem.


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A Company is a voluntary association ofpersons formed for the purpose of doingbusiness, having a distinct name and limitedliability.

They can be incorporated under the CompaniesAct (it may be any type of company)Corporations enacted under special enactments( Even those which are incorporated outside

India)Corporate soleAny other body corporate notified by the centralgovernment


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A company which has a minimum of two

persons . They have to subscribe to the MOAand AOAIt should be have a minimum paid up capital of1 lakh or more as prescribed by the article.

The maximum number of members to be fifty (it does not include members who are employedin the company, persons who were formerlyemployed)

The rights to transfer the shares are restricted inthe Private companies

Continued .


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Prohibits any invitation to the public to subscribeand therefore it cannot issue a prospectusinviting the public to subscribe for any shares in,or debentures of the companyIt prohibits acceptance of deposits from personsother than its members, directors or theirrelatives.

If two or more are holding one or more shares ina company jointly, they shall for the purpose ofthis definition, be treated as a single member.As there is no public accountability like a public

company, there is no rigorous surveillance.


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It can have a minimum of two members.It can commence business immediately afterobtaining certificate of incorporation.

It need not issue prospectus or statement inlieu of prospectus.It can have a minimum of 2 directors.It need not hold statutory meeting or filestatutory report with the ROC.


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A Public company means a company-> Which is not a private company> Which has a minimum paid-up capital of Rs 5lakh or such higher paid-up capital, as may beprescribed> Which is a private company and is a not asubsidiary of a company, which is privatecompany.

>It includes- any company which is a publiccompany with a paid up capital of less than 5lakh, then it has to enhance its paid up capital asper the statutory requirement


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Private LimitedNo. of members canbe 2 to 50.Minimum paid-upcapital of Rs. 1 lakh .Minimum no. of

Directors presentshould be 2.

Public LimitedNo. of members canbe 7 to Unlimited.Minimum paid-upcapital of Rs. 5 lakh.Minimum no. of

Directors presentshould be 3.


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Private LimitedCan accept depositsfrom Members,Directors or theirrelatives.Should contain wordsPrivate Ltd.at theend of its name. Can not invite publicto subscribe for share

or debenture.Statement in lieu ofprospectus notrequired even for 1 st issue.

Public LimitedCan accept publicdeposits.Should contain wordsLimited at the endof its name.

Can invite public tosubscribe for Share orDebenture.Statement in lieu ofProspectus orprospectus required.


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Private LimitedDoes not requireCertificate tocommence businessafter Incorporation.Statutory meeting and

statutory report is notrequired.No limit on fees ofDirector.

Public LimitedRequire Certificate tocommence businessafter Incorporation.Statutory meeting andstatutory report are

required.Director should not getmore than 11.5% ofprofit.


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The Act provides for conversion of publiccompany into a private company and viceversaA private company is converted into a publiccompany either by default or by choice incompliance with the statutory requirements.Once the action for conversion takes place then,a petition can be filed with the central

government with the necessary documents forits decision on the matter of conversion .


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1. It should take a necessary decision in its boardmeeting & fix up the time, place & agenda forconvening a General meeting to alter the AOA &

consequently the name by a special resolution aswell as to alter by special resolution the objectsclause of the Memorandum subject to theconfirmation of the Company Law Board UnderSection 17 & by ordinary resolution the ShareCapital Clause under Sec 94 if the alteration ofShare Capital is involved in the process.

Continued


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2. The company has to see that any change in thearticles confirms to the provisions of the

Companies Act [Section 31(1)] ; also to see thatsuch changes does not increase liability of anymember who had become the member beforealteration.

3. It must issue notices for the General meeting inorder to pass there at the special resolutionstogether with the explanatory statements forthe alteration of the articles and thememorandum.

Continued


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4. It will have to convene the general meeting inorder to pass there at the special resolution(i) for the purpose of the alteration of thememorandum and AOA; and (ii) also for thepurpose of deleting those articles which arerequired to be included in the articles of a

private company only [Section 3(1)(iii)]. Suchother articles which do not apply to a publiccompany should be deleted and those whichapply should be inserted. Consequent upon the

above changes, it will have to delete the wordPrivate from its name [Section 21]Continued


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5. It shall file either the prospectus in the Formprescribed under Schedule II or the statementin lieu of prospectus in the form prescribedunder Schedule IV within 30 days of thepassing of the resolution mentioned in (4)above in the manner stated in Section 44 .

The aforesaid prospectus or thestatement in lieu of the prospectus must be inconformity with Parts I and II of Schedule II orwith Parts I and II of Schedule IV respectively.

6. In the matter of the prospectus or the statementin lieu of the prospectus the company

Continued


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has to adopt abundant caution against anyuntrue statement being included therein,because inclusion of untrue statement will attractpenalty by virtue of Sec 44(4). It may be notedthat a statement included in a prospectus orstatement in lieu of prospectus shall be deemed

to be untrue if it is misleading in the form andcontext in which it is included. Likewise, wherethe omission from prospectus or a statement inlieu of prospectus of any matter is calculated to

mislead, it shall be deemed, in respect of suchomission, to be a prospectus in which an untruestatement is included.

Continued


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7. It shall file with the concerned Stock exchange6 copies of such amendments on both articlesand memorandum, one of which must be acertified copy.

8. It shall file with the Registrar the said specialresolution together with the explanatory

statement within 30 days of their passing [Sec192].

9. It must take some of the steps regarding futureissue of capital under Section 81 which are notin common with the steps discussed in relationto future issue of share.

Continued


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10. The company has to apply to the Registrar forthe issue of fresh Certificate of Incorporation forthe changed name, namely, the existing namewith word Private deleted. On issue of suchcertificate shall the name of the convertedcompany be final and complete [Sec 23].


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private company vs public company

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