The Difference of Private & Public Company
Are you having hard time to decide which types of companies that you wish to register? Worry no more. Below are the differences between Private Company and Public Company that will help you to decide.
By AZIZAM AZIZAN
DIFFERENCES OF PRIVATE AND PUBLIC COMPANY
Private Company (Sdn Bhd)
- Not more than 50 shareholders
- Cannot offer shares, debenture and invite public to deposit money
- Commencement of business and borrowing power immediately after incorporation – S.190
- Appointment or reappointment of directors can be passed by written resolution in accordance with – S.297
- At least one resident director
- The name of company end with Sendirian Berhad or Sdn. Bhd.
- Do not need to hold Annual General Meeting (AGM)
- No need to disclose financial statement to public
Public Company (Bhd)
- More than 50 shareholders
- Can offer shares, debentures and invite public to deposit money.
- Must submit a statement in lieu of prospectus & a statutory declaration by a director or secretary first in order to commence its business and borrowing power – S.190 (2)
- Director to be appointed or re-appointed at general meeting must be done by separate resolution, unless members agreed to appoint by a single resolution.
- At least two resident directors
- The name of company ends with Berhad or Bhd.
- Compulsory to hold Annual General Meeting (AGM)
- Need to disclose financial statement to public
NOT ALL COMPANIES ARE LISTED
It’s worth noting that not all publicly companies (Bhd) are traded on a stock exchange. It is possible for a business to be public but not listed on the stock exchange.
While such companies are unusual, they do exist. They are typically companies that are in the process of being publicly traded or that have amassed an excessive number of shareholders but are not yet ready to be listed on a stock exchange.
REASONS FOR CHOOSING EACH ENTITY
The distinction between private limited companies (sdn bhd) and public limited companies (bhd) exists so that company owners can incorporate their companies in the most suitable form to meet their needs at each point of their corporate journey.
Sendirian Berhad (SDN BHD)
When the size and needs of a corporation outgrow those of a sole proprietorship or a partnership, most small to medium enterprises (SMEs) would opt to incorporate as a private limited company (Sdn Bhd). The desire to shield shareholders from personal responsibility, as well as the need to collect funds from outside investors, are also reasons for doing so. Large corporations may opt to remain private in order to move more quickly and implement changes away from public scrutiny, or, in the case of family businesses, to keep ownership of the company within the family.
Companies, on the other hand, normally go public and are listed on a stock exchange to raise additional funds from public markets or to enable founders and current investors to sell all or part of their stakes in an initial public offering. There are a variety of reasons why some businesses chose to stay private and others go public. The decision will be based on the business’s, company’s, and shareholders’ needs at the time.