Page 3 - Lesson Notes 7

1. Only a natural person being Indian citizen and resident in India can form one-
person company or can be nominee for the sole member of one-person company.

2. One person can form only one, one-person company or can become nominee of
one such company.
3. It cannot be formed for charitable purpose.
4. It cannot carry out non-banking financial investment activities including
investments in securities of anybody corporate.
5. Its paid up capital should not be more than Rs.50 lakh.
6. The average annual turnover should not exceed Rs. 2 corer.

PRIVATE COMPANY:

A private company called private limited company has the following features:

1. Number of shareholders is at least 2 and up to 200.
2. There is a restriction on transfer of shares.
3. It cannot invite the general public through any means to subscribe its shares.

4. It is necessary for a private company to affix the word ‘private limited’ after its
name to distinguish it from a public company.

PUBLIC COMPANY:

A public company (also called public limited company) is one which is not a private
company. A public company has the following features:

1. It has requirement of minimum 7 members with no restriction on the maximum

number of shareholders.
2. It has no restriction on transfer of shares
3. It is not prohibited to invite the general public for subscribing to its shares.
Link: https://www.youtube.com/watch?v=2n3G-bae3Iw (meaning of company and
characteristics)
Link: https://www.youtube.com/watch?v=EVOi6rf69Gg (merits of company)
Link: https://www.youtube.com/watch?v=kHeR2Pd-1sc (demerits of company)
Link: https://www.youtube.com/watch?v=lMAEmJlgd7Q (private company and public
company)
Link: https (partnership business and company)

Differences between Private Company and Public company

Basis Private company Public Company
Members Minimum 2,Maximum 200 Minimum 7,No limit on maximum
number of member