What is a Public Company?
According to the Companies Act, 2013 a public company is one which invites the general public to subscribe to its share capital to raise funds. Applications are invited through the issue of prospectus and shares are allotment is made subsequently. Such companies allow their shareholders to transfer their shares easily without restrictions. The shares of a public company are listed on stock exchanges and all the trading is handled there with the help of brokers. Other characteristics of a public company include:
- The minimum number of members required to incorporate a public company is 7 and there is no limit on the maximum number of members.
- It has a minimum paid-up capital of 5 lakhs.
- Any private company which is the subsidiary of a public company is also a public company.
Every public company shall use the suffix “Ltd.” in its name as per the Companies Act, 2013.
Difference between Public Company and Private Company
A company is one of the most important and prominent forms of business organisation. It can be described as a voluntary association of individuals, having a common purpose, who agree to pool their funds and unite to achieve the said goals. It can be called an artificial person created under the jurisdiction of law having a distinct legal personality and its own signature, referred to as the common seal. It is essentially an artificial person in that it exists independently of the people who own, direct, and support its business. In legal terms, it is called an artificial person. Majorly there are two types of companies Public Company and Private Company.