There are two types of companies normally formed 1. Private Limited Company Public Company. Private Limited Company has limitation of share holders number and public company has unlimited number of shares.
- Private Limited Company cannot offer public shares but public company can offer public shares IF is listed by stock exchange.
- Sometimes private limited company cannot declare dividend but public company can declare dividend.
- Private limited company can have small number of paid up capital but public company has big volume of investment, paid up capital as rules and law of stock exchange and Company Act of the country.
- Public company may have listing or may not have and follow law of public Company Act.
- We have noticed that there are one or two director (s) are required as minimum to form private limited company and there are sometimes 3 to 7 directors are required as minimum to form public company, depend on law of the country.
- Normally dividend is declared annually, quarterly or monthly for public company.
- Public company rules and Act are stricter then private limited company.
- There shall be at least one company secretary appointed to look after the company considering law and policy.
- If public limited company is listed company of stock exchange is more rules and regulation have to follow.
- Appointing directors, increase shares, purchase property, declare dividend and any issue of constitutional have to announce before the share holders for consent in case of public company.
- Example of public company: Banks, financial institutions, insurance companies, group of companies those are listed in stock exchange.