Sociology | Mercantile Law | International Law | International Relations

Literally ‘Company’ is combination of two Latin terms; ‘Cum & Panis’ reflecting the meanings, ‘taking meals together’.

Lord Lindley, the expert in the landmark Solmon v. Solmon & Co. case noted; “By company is meant an association of many persons who contribute money or money’s worth and employ it (the money contributed) in some trade or business and who (members) share the profit or loss as the case may be arising there from.”

Private Company
Section2(28) of the Companies Ordinance explicitly states that; “Private Company” means a company which, by its articles

  1. Restricts the right to transfer its shares, if any;
  2. Limits the number of its members to fifty not including persons who are in the employment of the company; and
  3. Prohibits any invitation to the public to subscribe for the shares, if any, or debentures of the company.


  • Private company restricts the transfer of share unlike a public company but the share can be offered to the directors of the company if they will to buy.
  • Private company must not exceed from 50 as far as its membership is concerned otherwise it would become an illegal association. The minimum number of members required have been reduced from two to one in lieu of introduction of amendment is 2002.
  • Private company neither publishes any prospectus to invite public nor does it make any statement in place of prospectus.
  • Private Company does not hold the statutory meeting which a public company is bound to call within a definite period after its incorporation.
  • Private company can commence its business instantly soon after incorporation without even waiting for the certificate of commencement of business.
  • Private company does not publish its accounts.
  • It does not get its accounts audited by the qualified auditor unless its capital exceeds certain amount.

Public Company
No lengthy definition of public company has been given in the statute except that; public company is something which is not a private company. (Section#2(30).