WHAT IS A PUBLIC COMPANY?

A public limited company offers shares to the general public and has limited
liability. Its stock can be acquired by anyone, either privately through (IPO) initial
public offering or via trades on the stock market. It is strictly regulated and is
required to publish its true financial health to its shareholders.

WHAT IS A PRIVATE COMPANY?

Private companies are those companies whose articles of association restrict the
transferability of shares and prevent the public at large from subscribing to them.

DIFFERENCE BETWEEN
Basis Public Company Private Company

A private limited company

A public limited company
refers to a company that is
means a company that is
not listed on a stock
Meaning listed on a recognized stock
exchange and the shares are
exchange and whose shares
held privately by the
are publicly traded.
members concerned.

Number of Minimum 7 and there is no Minimum 2 and Maximum

Members limit for Maximum members. 200 members.

It can draw up its own articles

Articles of They must draw up their
of association or adopt
Association own articles of association.
Schedule F.

Transfer of The shares of a publicly Shares of a private company

 Basis Public Company Private Company

traded company are freely

are not freely transferable,
transferable, i.e., freely
shares as the articles of association
tradable in an open market
contain restrictions.
called the stock exchange.

It may invite the public to

Public Issuance of shares or bonds
subscribe for its shares or
subscriptions to the public is prohibited.
bonds.

It may issue a prospectus or

Issuing a Issuing a prospectus is
may opt for a private
prospectus prohibited.
placement.

The company cannot issue

Minimum The company may allot
shares unless it reaches the
allotment shares without obtaining a
minimum subscription
amount minimum subscription.
specified in the prospectus.

You can start a business

After incorporation, it
Starting a immediately after receiving
requires a certificate of
business an extract from the
commencement of business.
commercial register.

Two or more directors may

Appointment One director may be
be appointed by one
of director appointed by one resolution.
resolution.
 Basis Public Company Private Company

Statutory Statutory meeting is Statutory meeting is

meeting mandatory optional.

A public company must A private company must

Use of suffix compulsorily include the include “Private Limited” as
words “Limited” in its name. a suffix in its name.

A public company must

Disclosing A private company does not
compulsorily issue quarterly
reports to the have to disclose its financial
and annual financial
public results to the public.
statements to the public.

MINIMUM REQUIREMENT
 Minimum 7 shareholders are required to form a public limited
company.
 Minimum of 3 directors is required to form a public limited
company.
 A minimum authorized share capital of Rs. 1 lakh is required.
 DIN for all the concerned directors.
 Minimum share capital worth Rs. 5 lacs.
 At least one of the promoters should be a resident of India.
DIN

(DIN or Director Identification Number is a registration of Directors with

Registrar of Companies. Similar to PAN or Aadhaar, it is the mandatory
registration required for becoming Director in any Public Limited Company
in India)
 FEES INVOLVED

Sr. No Particulars Calculation Amount is Rs.

Rs. 500 per

1 DIN for 3 Directors 1500.00
DIN

DSC considering 7 Rs. 1500 per

2 10,500.00
directors/members DSC

Rs. 1000 per

3 Company name approval 1,000.00
application

depends on
Rs.1500
number of
(approx if
Stamp Papers and notary affidavit,
4 requirement is
charges certification
for 2
and
directors)
declarations

5 Company Registration

Filling of
I 300.00
form INC 7

II MOA 2000.00
 III AOA 300.00

IV Form INC 22 300.00

V Form DIR 12 300.00

Total 3,200.00

Stamp Duty Charges for

MOA, AOA and Form INC
6 1500 Avg.
7 (cost varies from state
to state)

Total Government Cost of Company

19,200.00
Registration

Note: The charges may vary from state to state. It

is only to give an idea about the charges and
levies required other than professional charge
HOW PUBLIC COMPANY WORKS?

Public companies stand a few advantages when compared to private companies.

A public company increases access to a debt market and sells future equity stakes.
After a firm goes public, revenue will be generated via additional offerings via
creation as well as the sale of new shares within the marketplace.
Public companies come with certain disadvantages too. In a public company,
company founders and company founders will have less control. They also come
with increased regulatory scrutiny. Also, a public company needs to adhere to
mandatory reporting standards which are regulated by government organisations.
Furthermore, eligible shareholders will be entitled to notifications and documents
on business-related activities.

Once a company becomes public, it will be held accountable to its respective

shareholders. As in, shareholders will vote on specific corporate structure
amendments and changes

COMPLIANCES
S. No Compliance Particulars of
Compliances
1. Annual General Meeting Annual General Meeting to be
conducted as per the
provisions of the Act.
2. Financial Statements Balance sheet, Director’s
Report, Cash Flow Statement
Auditor’s Report and the
consolidated Financial
Statement prepared in
Extensible Business Reporting
System
3. Annual Return Information about the
directors and shareholders
is to be filed with relevant
Registrar of Companies
4. Financial and Director’s Adoption of Financial and
Report Director’s Report
5. Income Tax Returns Income Tax Returns must be
filed before the Tax
Department.
6. Secretarial report Submission of Secretarial
Audit Report along with the
Board Report when: Its total
Paid- up capital is equal to or
crosses Rs.50 crore or Its
annual turnover is equal to or
exceeds Rs 250 crore.
7. Compliances under all Rules Includes the Listing
and Regulations associated Regulations of 2015
with SEBI

MAXIMUM REQUIREMENTS
 In a public limited company, there must be a minimum of 7
members and there is no upper limit to the number of members
that a public limited company can have while in a private
company it can have up to only 200 members.
 A company whether be public or private it can have a maximum
of 15 directors.