Private company:
A private company is one which has minimum paid up capital of one lac rupees and which by its articles put:
a)Restrictions on membership: minimum 2 and maximum 50 members.
b)Restrictions on transferability of shares: the members do not have a right to transfer their shares freely. There are restrictions on their rights.
Prohibition of issue of prospectus: the company must prohibit their invitation to public to subscribe for its shares and debentures
Public company:
A public company is one , which is not a private company. Thus, if the articles of a company do not provide the aforesaid three restrictions, it shall be a public company. A public company requires minimum seven members and there is no limit on maximum members. The shares and debentures of public company may be quoted on a stock exchange and are freely transferable.