Question

Differentiate between Private company and Public company.

Hint:

Public companies have more regulatory oversight and are open to public investment, unlike private companies.

Answer 1

Step 1: Definition of Private Company.
A private company is a company that has a limited number of shareholders and is not permitted to offer its shares to the public. Its shares are usually held by family members, close associates, or employees.
Step 2: Definition of Public Company.
A public company, on the other hand, is a company that can offer its shares to the public through a stock exchange. It has a larger number of shareholders and is subject to more regulations and oversight.
Step 3: Key Differences.
1. **Ownership:** A private company has fewer shareholders, while a public company can have thousands of shareholders.
2. **Share Transfer:** In a private company, shares are not freely transferable, whereas in a public company, shares can be freely traded on the stock exchange.
3. **Regulations:** Public companies are subject to more regulatory requirements than private companies.
4. **Disclosure:** Public companies are required to disclose more financial information than private companies.
Step 4: Conclusion.
Thus, private and public companies differ primarily in terms of shareholder numbers, share transferability, regulatory requirements, and financial disclosure. Final Answer: \[ \boxed{\text{Key differences include ownership, share transferability, regulations, and financial disclosure.}} \]