apples_or_oranges_1When, as a founder you plan to form a company, you often face this question: Do you want your company to be private or public and then you hit Google with no conclusive answer. Well, look no further, here we lay down the differences to help you decide for yourself

Characteristics Private Public
Minimum number of shareholders 2 (Two) 7 (Seven)
Share transfer restrictions Yes; any shareholder willing to transfer their shares has to offer them to the existing shareholders first; only if the existing shareholders refuse, they can transfer the shares to a third party. No share transfer restrictions is applicable;
Maximum number of shareholders 50 Unlimited
Minimum number of directors 2 (Two) 3 (Three)
Listing with stock exchanges for public trading of shares Cannot list (has to convert itself to public limited company first) Can list
Permission from Bangladesh Securities and Exchange Commission Will be necessary if the paid-up capital exceeds Tk.10,00,00,000 (Taka Ten Crore) Will be required if the paid up capital exceed Tk.1,00,00,000 (Taka One Crore)
Certificate of commencement from Registrar of Joint Stock Companies and Firms (RJSC) Not required It is advisable to obtain certificate of commencement of business from the RJSC before commencing business

During the formation stage, incorporating a public limited company is only advisable if the capital base is going to be large (at least more than a few crore) at the very beginning (which is unlikely for a startup). Otherwise, forming a private company is the best option for any startup as it would allow them to have the advantages of company (separate identity from the founders) while limiting the formalities requirements at a minimum.

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