Also The important points of distinction between a private compamy and a public company are as follows:1. Minimum number of memberr.The minimum mmmber of persons required to form a pen ate company is hvo. It is seven persons in case of a public company
: 2. Maximum number of members. The maxamnm number of members of a private company must not exceed fifty exchlding members who are or were hi the emylovment of the company. But no such maxinDrim limit is fixed in the case of a public company
3 Minimum number of directors. A yrtvate company must have at least two directors whereas a public company is required to have at leas t three directors
.4. Transfer of shares. In a private company theright.to transfer shares is restricted by the Articles of Association and the transfer of shares requires the prior permission of the Board of Directors. But in the case of public company a shareholder can transfer his shares freely.vvitbout restriction.
5. Public subscription. A private con.arn be its Ardcles of Association prohibits any i nvitation to the public to subscribe for amy shares in, or dentures of, the colmpany A public company can invite public for the subscription of this shares and debentures.
62 'S : SECRETARIAL PRACTICE
(a) Conversion by default. Where a private company makes a default in complying with tile essential statutory requirements as laid down in Section 3(1')(iii)ofthe Actiie., it-its membership exceeds fftv Itpenmts free transfer of shares, or fitvitespublicto subscnbeto its shares company automahcallys The Company Law Board, however, may relieve the company from being treated as a public company, on such terms and conditions as it thinks just and equitable, if it is of opinion that the default was due to inadvertence or accident or some other sufficient cause, on an application of the company or any interested-person (Sec. 43).
(b) Where a pen ate CompaDy becomes a subsidiary' of a public company
(c) Where a pn Yate CQmpany becomes a - deemed to be public cornpamy' by vi rtue of Section 43A. (For details of Section 43A, refer back m this chapter to the heading Dectued to be Public Compa).