Sociology | Mercantile Law | International Law | International Relations

Distinction between the public and private company in accordance with their respective explanations in the statute and their modes of practical functioning is as following;

1. Relevant Statutes & Provisions
Both private and public company are governed by the Companies Ordinance-1984 with clause 28 of section#2 concerning the former and clause 30 of the same section related to the latter.

2. As to Membership

• Previously the minimum number of members for incorporating a public company was 7 which were later reduced to 3 in accordance with amendments made in 2002.
• In private company the minimum number of members should be 1 in accordance with the amendments made in 2002 which introduced Single Member Company’s concept in Pakistan. The maximum members should not exceed 50.

3. As to Management

• A company is to be managed by the director chosen for three years individually and the board of directors collectively. Such board comprises of 7 members.
• A private company is also governed by directors but not elected as in public company.

4. As to Transfer of Share

• In public company a share can be easily transferred.
• Here, in a private company the transfer of case has been strictly checked.

5. As to Capital

• Capital of public company can be raised by issuance of more shares or debentures.
• Raising the capital in private company is not that easy as neither shares nor the debentures are to be issued here.

6. As to Managing Accounts

• Public company is bound to manage its accounts and book it with the registrar.
• Private company may manage its accounts but is not bound to book with the registrar.

7. As to Statutory Meeting

• Public Company does hold the statutory meeting within a definite period after its incorporation.
• Private company does not call any such meeting.

8. As to Registration
Both kinds of companies are to be registered with the SECP.

9. As to Publication of Balance Sheet

• Balance sheet is to be published by public company after every three months.
• Private company needs no step to take in this regard.

10. As to Commencement of Business

• Business is commenced by a public company after it receives the certificate of commencement.
• Private company may commence its business without any such certificate.

11. As to Allotment of Shares

• Public company does not allot its shares soon after incorporation.
• Private company may allot its shares soon after its incorporation.

12. As to Issuance of Prospectus or Statement

• Public company is bound to publish any of the two.
• Private company neither publishes prospectus not issues statement.

13. As to Directors

• Public company shall not have less than three directors.
• Private company shall not have less than two directors in case of ‘Multiple Member Company’ providing an exception to ‘Single Member Company.’

14. As to Issuance of Debentures

• Public company can issue debentures.
• Private company does not issue debentures.

15. As to Dissolution

• Public company is dissolved as directed in the ordinance.
• Private company has a separate procedure for its dissolution.