# Public Company — Section 2(71)

A company is a Public Company if it satisfies both:

1. it is NOT a private company; AND

2. it has a minimum paid-up share capital as may be prescribed (not applicable to Section 8 companies).

## Deeming provision — the trap

> A subsidiary of a public company shall be deemed to be a public company for the purposes of this Act, even where such subsidiary continues to be a private company in its articles.

This is one of the most heavily tested ideas. A company can call itself "XYZ Pvt Ltd" in its Articles and still be legally treated as a public company if its holding is a public company.

## Why this matters

Many provisions are stricter for public companies (e.g., minimum 3 directors, public-company governance rules, restrictions on loans to directors, etc.). The deeming provision pulls private subsidiaries of public companies into that stricter regime.

## Visual

```

Public Co. Ltd (Holding)

| (owns >50%)

XYZ Pvt Ltd -> Articles still say 'Private'

But TREATED as Public Co. under Sec 2(71) proviso

```

## Compare with Sec 2(68) Private Company

Private = restrictive Articles (3 tests) + prescribed min PUSC.
Public = Not private + prescribed min PUSC.
Subsidiary of public = always public (regardless of its own Articles).

Worked example

### Example 1

Example. Reliance Industries Ltd is a public company. It incorporates a 100%-owned subsidiary called 'Rel-Tech Pvt Ltd', whose Articles contain all three private-company restrictions. Question: Is Rel-Tech a public or private company under the Act? Answer: Under the proviso to Sec 2(71), Rel-Tech is deemed a public company for purposes of the Act, even though its Articles still restrict share transfer, cap members at 200, and prohibit public invitation.

⚠️ Common exam mistakes

Treating a subsidiary of a public company as private merely because its Articles still have the restrictions — the deeming provision overrides this.
Forgetting that the prescribed min PUSC requirement does not apply to Section 8 companies.
Confusing 'public company' with 'listed company' — a public company need NOT be listed on a stock exchange.

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

Public company means a company which: (i) is not a private company; and (ii) has a minimum paid-up share capital as may be prescribed (not applicable to Section 8 companies). Provided that a subsidiary of a public company shall 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.

Now that you've read this — what's next?

Move from understanding → mastery in 3 clicks. Each option below picks up from this lesson's topic.

🔥 Drill 5 Qs on this → ✍️ Adaptive practice →

Public Company [Sec 2(71)]

Worked example

⚠️ Common exam mistakes