# Public Company — Section 2(71)

## Definition

A public company is a company which:

1. Is NOT a private company, AND

2. Has seven (7) or more members to form the company.

## Important Deeming Provision

A private company which is a subsidiary of a public company shall ALSO be deemed to be a public company for the purposes of this Act — even where such subsidiary company continues to be a private company in its articles (i.e., even where it retains the three restrictions: R-L-P).

### Why This Matters

This prevents large public companies from using private subsidiaries to escape compliance requirements applicable to public companies.

## Comparison

Feature	Private Company	Public Company
Minimum members	2	7
Maximum members	200	No limit
Minimum directors	2	3
Transfer of shares	Restricted	Freely transferable
Invitation to public	Prohibited	Allowed
Name ends with	'Private Limited'	'Limited'

## Memory Aid

'7 to infinity' — minimum 7 members, no maximum cap.

Worked example

### Example 1

Q: PQR Pvt. Ltd. is a wholly-owned subsidiary of ABC Ltd. (a public company). Will PQR Pvt. Ltd. be treated as a public or private company?

A: As per Section 2(71), a private company which is a subsidiary of a public company shall be deemed to be a public company for the purposes of the Act, even though it continues to have the three restrictions in its articles. Hence, PQR Pvt. Ltd. will be deemed a public company.

### Example 2

Q: What is the minimum number of members required to form a public company?

A: Seven (7) members.

⚠️ Common exam mistakes

Stating the minimum members of a public company is 5 — it is 7
Forgetting the deeming provision: a private subsidiary of a public company is treated as a public company
Thinking a public company must have shares listed on a stock exchange — listing is a separate concept (Section 2(52))
Confusing public company with listed company — all listed are public, but not all public are listed

Bare-Act text Section 2(71) · Companies Act, 2013 · click to expand

'Public company' means a company which — (a) is not a private company; (b) has a minimum paid-up share capital as may be prescribed: Provided that a company which is a subsidiary of a company, not being a private company, shall be deemed to be public company for the purposes of this Act even where such subsidiary company continues to be a private company in its articles.

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Public Company [Section 2(71)]

Worked example

⚠️ Common exam mistakes