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Class : 11
Unit : Business


Distinguish between private and public limited company.

Ans : The difference between private and public limited company are presented below: Basis of Difference Private limited company Public limited company Number of members According to company act 2063, in private limited company the minimum number of member is one and the maximum should not be exceeded 50. In Company Act 2063, for public limited company the minimum number of members is 7 and maximum members are unlimited. Commencement of business Private limited company can start its business immediately after getting certificate of incorporation from the concerned department of the government of Nepal. A public limited company can start its business only after getting certificate of commencement from concerned department of government of Nepal. Number of directors The number of directors should as prescribed in articles of association of the company. The minimum number of directors should be 3 and maximum not exceeded to eleven. Issue of shares and debentures It cannot issue shares and debenture to general public for collection of capital. It can issue shares among the limited number of people. It can issue shares and debenture to unlimited general public for collection of capital and other funds. Issue of prospectus It is not bound to publish prospectus. It is bound to publish prospectus at time of issue of shares for public. Transfer of shares Shareholders cannot transfer their shares to the third party without mutual agreement of existing shareholders. Shareholder can easily transfer their shares to the third party without any restriction from management. Statutory meeting It is not bound to hold a statutory meeting of shareholders. It is essential to hold statutory meeting of shareholders within the period of 1 to 6 month of commencement of business. Use of word “Limited” For quick identification, the word “Pvt Ltd” is used after the name of company. For quick identification, the word “Ltd” is used after the name of company. Publication of financial statement It is not necessary to publish its financial and other statement at the end of every fiscal year in any newspaper. It is essential to publish audited financial and other statement at the end of every fiscal year in National newspaper.