Before starting the firm name registration process, decide for yourself what type of company you want to open. The primary distinctions between public and private companies are as follows:
- A public corporation may issue its shares, other titles, and debentures to the general public, but a private company cannot;
- The name of a publicly traded corporation must conclude with “public limited company”;
- A public corporation must have a minimum of two directors, but a private company may have just one;
- A public business may have an unlimited number of stockholders, but a private firm may have no more than fifty (excluding staff);;
- A public company may limit the transferability of its shares if its articles enable it, i.e. directors may refuse to accept a transfer of unpaid shares, but a private company must restrict the transferability of its shares;
- There cannot be any restrictions on the transferability of shares of a public corporation whose shares are traded on an exchange.
- The minimum number of shareholders for a public company is seven, but for a private business it is only one;
- If the number of shareholders in a public company falls below seven and the company continues to trade for more than six months, the shareholders lose their limited liability status and become personally liable for the company’s debts incurred during this time;
- In a private business, shares may be distributed immediately upon the issuance of the certificate of formation, while a public company may not do so until it has acquired the minimum subscription;
- Unlike a private corporation, a public company may repurchase its shares, subject to the limits stipulated by the Companies’ Law;
- A public corporation must submit a statement in place of a prospectus before the first allocation of its shares if no prospectus was published, although a private company is exempt from this need;
- A private company may begin operations immediately upon formation, but a public company must comply with certain conditions of the Companies’ Law prior to beginning operations;
- Section 124 of the Companies’ Law mandates that, once established, a public company must conduct a statutory meeting and produce a statutory report within certain timeframes;
- Public and private companies choose directors differently. In public organizations, appointing two or more directors requires separate resolutions, whereas in private enterprises, a single resolution is sufficient.
- A public company may not make loans to its directors;
- the minimum authorized and issued share capital of a public company cannot be less than €25,630,00, whereas there is no such minimum requirement for private companies;
- a public company may not issue shares at a discount, whereas a private company may, under certain conditions, issue shares at a discount;
- A proxy of a shareholder in a private company may also speak at a general meeting, whereas this is not allowed in a public company;
- A public company is not permitted to provide financial assistance for the direct or indirect purchase of its shares or the shares of its holding company, whereas a private company is permitted to do so under certain conditions;
- A public company must prepare audited financial statements each year. Regarding the distribution of dividends in private corporations, the law does not include any precise regulations.
- A public company may only distribute interim dividends if interim financial statements are prepared that demonstrate there are sufficient funds for such distribution;
- there is no requirement in the Companies’ Law for a private company to prepare financial statements before the distribution of interim dividends;
- prudent directors should use this method to avoid distributing profits from other sources. This also applies to private enterprises.
- If a public company loses 50% of its share capital or the loss is so large that the directors consider the business’s goal is in peril, an extraordinary general meeting must be summoned to determine whether the company will be liquidated or further action is necessary.
Remember that you can easily register a company in Cyprus online with Fintech Harbor Consulting.
