What is a public company?

A public company is defined as a company that offers a part of its ownership in the form of shares, bonds, securities, or debentures to the general public through the stock market.

There must be at least 7 members to form a public company.

As per Section 3 ( I ) ( iv ) of Companies Act 1956, a public company means a company which:

A. is not a private company

B. has a minimum paid-up capital of 5 lakh or such higher paid-up capital as may be prescribed

C. is a private company, being a subsidiary of a company which is not a private company

A public company should not be mistakenly understood as a publicly owned company as the latter is exclusively owned and controlled by the government.

A public company issues its shares to the general public without any restriction on the maximum number of persons.

A public company can be segmented into two types:

A. Listed company: A public company whose shares are listed and traded in the stock exchange like, Tata Motors, Reliance, etc.

B. Unlisted company: A public company whose shares are not listed in the stock exchange and thereby these shares cannot be traded in the stock exchange.