Joint Stock Companies

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Types of Joint Stock Companies

Joint stock companies include main two types (1) Private Company, and (2) Public Company.

(1) Private Company

  • Compulsory for these companies to write “Private Limited’ after their names.

  • Ownership of these companies is confined only to well-known selected persons.

Features:

  • Cannot have more than 50 members. Employees of the company are not included in this.

  • Cannot invite the public to purchase its shares and debentures through open invitation.

  • Restricts the rights of the members to sell or transfer their shares.

  • Minimum paid up share capital of one lakh rupees.

(2) Public Company

  • Write public limited or simply limited after its name.

  • Example:

    • Reliance Industries Limited

    • Bajaj Auto Limited

    • Hindustan lever Limited

    • Steel Authority of India Limited

Features:

  • Invite the public to subscribe to its shares and debentures by open invitation.

  • Minimum of 7 members is required to establish a public company.

  • No limit on the maximum number of its members.

  • No restriction on the transfer of shares.

  • Minimum paid up capital of five lakhs rupees.

Other Types of Company:

Other types of company

Other Types of Company

Other types of company

Distinction Between a Private Company and a Public Company

Distinction Between a Private Company and a Public Company
Distinction between a Private company and a Public company

Basis

Private Company

Public Company

Minimum number of members

2 member

7 member

Maximum number of members

50 member

No limit

Minimum paid up capital

1 lakh

5 lakh

Identification

‘Private Limited’ to its name.

Limited’ to its name

Transfer of Shares

Shareholder cannot transfer their share

Shareholder freely sell their share

Invitation to the public to purchase shares and debentures

Cannot give open invitation

Invite the public to purchase its shares and debentures through the issue of prospectus.

Commencement of business

Start its business immediately upon its incorporation

Cannot start its business immediately upon its incorporation