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Public Company

Updated on March 10, 2023

Public company is a company that has its shares subscribed by the general public through an approved process and is listed on a stock exchange and such shares are traded publicly. Any person from the general public can buy and sell shares of a public company on the stock exchange that is listed in. Every person who owns the shares of a public company is called a shareholder.

The ordinary share capital of a public company is split into smaller units of specific face value for each such unit. Every ordinary shareholder of a public company has a right to vote as well as a right to dividends declared by the company from time to time.

The Companies Act, 2013 has a negative definition of a public company which states that a public company is any company that is not a private company. It further states that following conditions for a company to be classified as a public company.

A public company should have a minimum of seven members with no maximum limit on the number of members
A public company needs to have a minimum paid-up capital of Rs. 5,00,000 with no maximum limit
Any private company which is also a subsidiary of a public company will be considered a deemed public company

Other requirements for a public company

A public company needs to adhere to stringent provisions of compliance and disclosure as per the Companies Act, 2013, SEBI, MCA, ROC, and stock exchanges. These added restrictions are to ensure the safety of the public contribution in such companies and to ensure the company’s survival to perpetuity.