Introduction
The term “company” is very ancient one. Since its origin,
this term has passed through various stages of evolution. In this present
world, company is considered an association of a number of individuals, which
is formed for some common purpose. Under companies Ordinance, various kinds of
company have been described. Out of these kinds of company, one kind is public
company and other kind is private company.
Definition of Public
company
Public company can be defined as that company, which is not
private company. Here important point is that such company consists of at least
seven members and its seven directors.
Definition of Private
Company
Private company means a company which by its articles
restricts the rights to transfer it shares, if any, limits the number of its
members to 50, not including persons who are in the employment of the company, and
prohibits any invitation to the public to subscribe for the shares if any or
debentures of the company Provided when two or more person s hold one or more
shares in a company, jointly, they shall, for the purposes of definition of
private company, be treated as a single member. (Section 2(28)).
Difference between Private and Public company
Following are the difference between private and public
company
i. As to members
In private company minimum 2 member’s maximum 50 members. In
public company minimum 7 member but maximum no limit.
ii. Name
Private company makes use of private limited after its name
while public company makes use of limited after its name.
iii. Commencement of
Business
Private company can commence its business after getting of
certificate of incorporation where as public company requires both the
certificate of incorporation and the certificate of commencement for its
commencement.
iv. Membership
In private company, minimum number of its members its two
and maximum number of its members is fifty. On the other hand, minimum number
of members is seven and maximum number of members is unlimited in public
company.
v. Memorandum of
Association and Articles of Association
Memorandum of association and articles of association of
private company are signed by at least two persons, but memorandum of
association and articles of association of public company are signed by at
least seven persons.
vi. Payment of tax
As far as private company is concerned, tax is paid on the
whole profit. On the other hand, both public company and individual pay tax.
vii. Statutory
Meeting
It is not necessary for private company to hold statutory
meeting where as it is compulsory for public company to hold such meeting.
viii. Filling of
prospectus or statement-in-lieu of prospectus
Private company is not required to file prospectus or
statement-in-lieu of prospectus. Contrary to this, public company is required
to should file prospectus or statement in lieu of prospectus.
ix. Transfer and Sale
of Shares
Private company cannot sell its hares and even its shares
are not transferrable. Contrary to this, public company can sell its shares and
even its shares are transferrable.
x. Dissolution
Under companies ordinance, separate and different procedures
have been provided for dissolution of private company and public company.
Conclusion
I say, I include that there are some admitted principles as
far as company is concerned. Among these principles, most prominent are that a
company is an artificial person and its legal entity is separate from its
members. These principles are applicable to all kinds of company including
private company and public company.
Good n concised. Thanx
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