Part D The formation and constitution of business organisations 12: Corporations and legal personality 183A company limited by guarantee which has no share capital, and an unlimited company, cannot be
public companies.3.4.2 Minimum membership and directors
A public company must have a minimum of one member. This is the same as a private company.
However, unlike a private company it must have at least two directors. A private company must have just
one. Directors do not usually have liability for the company's debts.3.5 Private companies
A private company is the residual category and so does not need to satisfy any special conditions. They
are generally small enterprises in which some if not all shareholders are also directors and vice versa.
Ownership and management are combined in the same individuals.
Therefore, it is unnecessary to impose on the directors complicated restrictions to safeguard the interests
of members and so the number of rules that apply to public companies are reduced for private companies.3.6 Differences between private and public companies
The main differences between public and private companies relate to: capital; dealings in shares;
accounts; commencement of business; general meetings; names; identification; and disclosure
requirements.The more important differences between public and private companies relate to the following factors.3.6.1 Capital
The main differences are:
(a) There is a minimum amount of £50,000 for a public company, but no minimum for a private
company.
(b) A public company may raise capital by offering its shares or debentures to the public; a private
company is prohibited from doing so.
(c) Both public and private companies must generally offer to existing members first any ordinary
shares to be allotted for cash. However a private company may permanently disapply this rule.3.6.2 Dealings in shares
Only a public company can obtain a listing for its shares on the Stock Exchange or other investment
exchange. To obtain the advantages of listing the company must agree to elaborate conditions contained
in particulars in a listing agreement with The Stock Exchange. However, not all public companies are
listed.3.6.3 Accounts
(a) A public company has six months from the end of its accounting reference period in which to
produce its statutory audited accounts. The period for a private company is nine months.
(b) A private company, if qualified by its size, may have partial exemption from various accounting
provisions. These exemptions are not available to a public company or to its subsidiaries (even if
they are private companies).
(c) A listed public company must publish its full accounts and reports on its website.
(d) Public companies must lay their accounts and reports before a general meeting annually. Private
companies have no such requirement.FAST FORWARD