In addition to a distinction in ownership, the two types of organizations are

often divided by their aims. Public sector groups have a duty to serve the
public, and are not usually in direct competition with other groups to meet
the same demand. They are not profit oriented, and tend to provide
services rather than goods. Private companies, in contrast, usually aim for
profit and try to outperform competitive businesses to meet the same
demands. While private companies may have some humanitarian goals,
their bottom line is typically the profitability of the business, not necessarily
serving the public.
There are many different types of private businesses that may be
considered part of the private sector. Corporations, retail stores,
restaurants, and gas stations are all common types of private businesses.
Non-profit organizations, such as charitable foundations or private schools,
are also usually considered part of the private sector unless they are
created and maintained by government funds.
Public sector organizations tend to focus on providing social services to the
public as mandated by law or executive order. Types of public sector
organizations include public schools, public health insurance, police, and
fire departments. Public transportation systems, road maintenance,
and military jobs are also usually under the auspices of the public sector.
Sometimes, public sector and private sector services intersect, offering
citizens a choice between relying on publicly provided organizations or
paying a premium for more flexible private services. In the
security industry, for instance, some people may choose to hire private
security agents to guard a bank, store, or residence. In this case, using
public resources such as the police might be impractical, as a public police
force is answerable to the entire public and cannot put all their efforts
toward the needs of one citizen.
Different nations put different emphasis on the roles of the public and
private sector. While some countries feature a large public sector that
provides a wide variety of services, citizens often pay for these services in
the form of high tax rates. Those with a large private sector, on the other
hand, may grant more opportunity to choose between providers but may be
subject to the whims of the financial market and be more difficult for low-
income citizens











1. Introduction
There are numerous differences between private and public companies, some
derived from statute while others are derived from practice. The general rule is that
any company which is not a public company is a private company.
Very broadly stated the most important difference between a public company and a
private company is that a public company is intended as a vehicle not only for a
business but also for public investment in that business, whereas a private company
is the private concern of the persons engaged in the business incorporated in it.
The only substantial advantage of a public company is that if the public company
satisfies the conditions for listing, its shares can be listed or dealt with on a
recognised Stock Exchange, thus enabling the company to raise equity capital by
offering shares to the public, and also permitting shareholders to buy and sell their
shares very easily. In return for this benefit, and to protect public investors, public
companies are subject to considerably more stringent controls than private
companies. Many UK public limited companies (PLCs) are, however, not,
listed on a Stock Exchange, so the owners should carefully consider whether they
are happy to comply with these extra burdens, or whether they should consider re-
registering as a private company.
The following paragraphs contain some of the most important distinctions in law
between public and private companies. Please note that this list is not exhaustive.
Unless otherwise stated, none of the provisions contained in Paragraphs 2 to 13
below apply to private companies. Further, as appears in Paragraphs 14 to 22
below, private companies may also do a number of things which public companies
may not do.
2. Minimum share capital for public companies
In the case of a public company the nominal value of its allotted share capital must
not be less than the authorised minimum, at present 50,000, (the Euro equivalent
is currently about 59,000).
3. Allotment of shares
A public company may not allot shares unless at least one-quarter of their nominal
value and the whole of any premium has been paid up.
4. Registrars certificate for public company doing business
A public company may not do business or exercise any borrowing powers unless
the registrar of companies has issued a certificate under the Companies Act 2006
or the company is re-registered as a private company. Before issuing a certificate,
the registrar must be satisfied that the nominal value of the companys allotted
share capital is not less than the authorised minimum, and the company must
deliver a statutory declaration complying with the Companies Act 2006.
Accordingly, no public company may do business until it has shareholder funds of
a value equal to at least one-quarter of the authorised minimum.
5. Non-cash consideration for shares
A public company may not allot shares as fully or partly paid up (as to their
nominal value or any premium on them) otherwise than in cash if the consideration
for the allotment is or includes an undertaking which is to be, or may be,
performed more than five years after the date of the allotment. If the allotment for
non-cash consideration is permissible, then an experts prior valuation and report
on the consideration given is usually required. In any event, a public company may
not allot shares in consideration of an undertaking to do work or perform services.
6. Acquisition of non-cash asset in initial period
A public company formed as such may not enter into an agreement with a
subscriber to its Memorandum of Association for the transfer by him during the
initial period of any non-cash assets (whether to the company or some other
person) if the consideration to be given by the company is worth one-tenth or more
of the companys nominal share capital then in issue. Such an agreement may be
validated if:
1. the consideration received by the company and any non-cash consideration
given by it are independently valued, and a report is given to the company
within six months of the agreement;
2. the terms of the agreement are approved by ordinary resolution of the
company; and
3. copies of the resolution and the report have been circulated to members of
the company, no later than the giving of the notice of the meeting at which
the resolution is proposed.
7. Disapplication of pre-emptive rights
Unlike a private company, a public company may not exclude altogether the
preferential rights conferred by law on its existing equity shareholders to subscribe
for new shares or other equity securities and which it offers for subscription in
cash: it may only dis-apply those provisions for a limited period.
8. Distribution of profits
Like a private company, a public company may make distributions to its
shareholders only out of the excess of its accumulated realised profits (so far as not
already utilised by distribution or capitalisation) over its accumulated realised
losses (so far as not previously written off in a reduction or reorganisation of
capital duly made); but unlike a private company, a public company is prohibited
from making a distribution if its net assets are less than the aggregate in value of its
called-up share capital and its un-distributable reserves. The distribution must not
reduce the amount of those assets to less than that aggregate.
9. Treatment of shares held by or for public company
Where shares in a public company are forfeited or where a company acquires
shares in itself in which it has a beneficial interest, such shares, unless previously
disposed of, must be cancelled within three years of such forfeiture or acquisition.
In general, a public company may not take mortgages, charges or liens over shares
in itself.
10. Duty of directors on serious loss of capital
If the net assets of a public company are reduced to half or less of its called-up
share capital, its directors must, not later than 28 days from the earliest day on
which that fact is known to a director of the company, duly convene an
extraordinary general meeting, to be held not later than 56 days from that day, for
the purpose of considering whether any, and if so what, steps should be taken to
deal with the situation.
11. Restrictions on loans and quasi-loans
Where a group of companies includes a public company, not only are loans to
directors prohibited (as is the case with private companies and groups of private
companies), but transactions (quasi-loans) in the nature of or in substitution for
loans to such directors are also prohibited.
12. Company secretary
A private company does not have to appoint a company secretary, unless its
Articles require it to do so. A public company must have a company secretary and
it is the duty of the directors of a public company to take all reasonable steps to
ensure that the secretary of the company is a person who appears to them to have
the requisite knowledge and experience to discharge the functions of secretary to
the company, and who complies with the statutory requirements. Whereas a private
company secretary need not be specially qualified or experienced, the secretary of
a public company must be someone with the appropriate knowledge and
experience, e.g. a barrister, a solicitor or a chartered secretary.
13. Company investigations
In addition to their powers to issue securities to the public, public companies have
a statutory power (not conferred upon private companies) to enquire into the
existence of interests in their shares (either on their own initiative or upon the
requisition of a members holding one-tenth of the voting capital).
14. Form and filing of accounts
A public company must submit its accounts to its members in a general meeting
within 6 months of the end of its accounting period: a private company has up to 9
months. A small or medium-sized private company may be exempt from the
obligation of having its accounts audited and may file abbreviated accounts.
A private company which qualifies as small or medium-sized may be exempt from
certain provisions of the Companies Act relating to accounts and disclosure. A
company (or a group containing such a company) is not eligible for small or
medium-sized status (and relief from disclosure) if at any time during the year it
was a public company, a banking or insurance company, an authorised person
under the Financial Services and Markets Act 2000 or certain types of investment
company.
15. Dormant companies
A private company which qualifies as a small company need not appoint auditors
while it is dormant. A dormant company is currently required to file an abbreviated
balance sheet with notes.
16. Financial assistance for acquisition by private company of its own shares
All companies are prohibited from giving financial assistance, either directly or
indirectly, for the acquisition of their own shares. However, a private limited
company is permitted to do so if a special resolution is passed following a statutory
declaration of solvency by the directors and a report by the auditors.
The private company must have net assets which are not reduced by the
acquisition, or, to the extent that they are reduced, the assistance is provided out of
distributable profits.
17. Redemption or purchase of own shares out of capital
Subject in each case to strict compliance with the statutory safeguards (including a
sworn solvency statement made by all directors), a private company may not only
purchase its own shares or redeem any shares issued as redeemable shares out of
its distributable profits (as may a public company), but may also effect such a
purchase or redemption by applying assets representing its capital and non-
distributable reserves.
A public company has to apply to the High Court if it wishes to reduce its share
capital; for example in order to write off accumulated losses on the balance sheet,
which is a costly procedure.
18. Disclosure of interests in shares
Persons entitled to interests in the shares of a private company carrying full voting
rights need not disclose them to the company, and the company is not required to
keep a register of such interests. A person who acquires an interest in the shares
with voting rights in a public company may, in certain circumstances, come under
an obligation to notify the company of his interest. A public company is required to
keep a register of interests in its shares.
19. Sole director
A private company may have a sole director, whereas every public company must
have two directors.
20. Meetings and shareholder resolutions
A public company must hold an Annual General Meeting within 6 months of its
financial year end. A private company does not need to hold an AGM unless its
Articles require one. Shareholder resolutions in a public company have to be
passed by the appropriate majority at a properly convened meeting, whereas most
shareholder resolutions in a private company can be passed by a written resolution,
which can be a quicker and simpler process.
21. Appointment of directors
Directors of a private company can be appointed at a general meeting by a
composite resolution without further authorisation. At a general meeting of a
public company, a single resolution appointing two or more directors may not be
moved unless agreed by the general meeting without any vote being given against
it.
22. Rights of a proxy
A proxy attending a general or class meeting of members in a private company has
the same right as the member appointing him to speak at the meeting.
23. Practical differences between public and private companies.
There are a number of practical differences between public and private companies,
including the following:
23.1 The directors of a private company usually hold or control all or a majority of
its shares.
23.2 Shares in a private company are rarely traded, as there is no established
market place and no readily ascertainable market price for them. Further, it is usual
for the articles of association of private companies to impose restrictions on
transfers of shares.
23.3 It is common for private companies to pay little or no dividends, especially
where, as is often the case, the directors also hold all or most of the shares and are
virtually the owners of the company;most of the profits being applied towards
directors remuneration, and any surplus to reserves. Shareholders in a private
company who are not directors may therefore receive no income return from their
shares. However, if the failure to pay dividends in contrast with substantial
payments of remuneration to directors amounts to unfair prejudice, non-director
shareholders may have rights under the Companies Act 2006.
23.4 In the event of a dispute, minority shareholders in a private company are
likely to be in a weak position. Their shares, as mentioned above, may yield no
income and it is difficult to realise their capital value. Further, whereas commonly
in a public company no single group of connected parties controls a majority of the
shares, the opposite may be the case in a private company. In the event of a
dispute, minority shareholders in a private company are likely to be in a weak
position.
23.5 Whereas the directors and shareholders in a private company are frequently
the same persons, there will usually be a significant difference in personnel in a
public company.
23.6 In a public company, the position of a director is more like that of an
employee paid to manage a business and shareholders are more likely to be
investors, whether institutional or otherwise.
The material contained in this guide is provided for general purposes only and does
not constitute legal or other professional advice. Appropriate legal advice should
be sought for specific circumstances and before action is taken.
A quasi loan is defined by the Companies Act as ..a transaction under which
one party (the creditor) agrees to pay, or pays otherwise than in pursuance of an
agreement, a sum for another (the borrower) or agrees to reimburse, or
reimburses otherwise than in pursuance of an agreement, expenditure incurred by
another party for another (the borrower):
(a) on terms that the borrower (or person on his behalf) will reimburse the creditor;
or
(b) in circumstances giving rise to a liability on the borrower to reimburse the
creditor.
















WORKING IN PUBLIC SECTOR AND PRIVATE
SECTOR
Working in the Public Sector
Public sector employment involves working for any local, state or federal
agency. Working in the public sector can provide a great deal of
satisfaction. Public employees are valued for the services they provide to
the community. We see the impact of public services from the moment we
wake up. The water we use, the cut grass along the interstate, road signs,
pothole repair, and the parks we enjoy are all a product of public sector
employment. Working for the public can be a challenge but it can also be
extremely rewarding. Public employees are commonly referred to as public
servants. They serve the community and their work is often overlooked
unless there is a problem. A prime example is our postal services

Service Focused
The public sector is primarily focused on providing services to the citizens
of that community. These services can range from trash pickup, to social
services, to serving on city council. Unfortunately, public sector
employment often does not produce revenue and is dependent upon tax
revenues and fees for their operational costs and employee salaries. Most
departments in the public sector have limited budgets but are still expected
to provide a high level of services. Most departments rarely have a surplus
at the end of the fiscal year. In fact, most departments are encouraged to
spend it all before the end of the year. The primary purpose of the public
sector is to provide a service and not to gain a profit.
Public Scrutiny
Public sector employment is pretty much %100 funded through tax payer
dollars. For this reason, public employees have to be mindful of how they
are perceived by the public. This is especially true for employees who tend
to be widely visible and utilize city/state vehicles. Public employees are
sometimes viewed in a negative light. Weve all heard the joke about the
one public works employee thats actually working and the 10 employees
watching him. Of course the truth is that most public employees work hard
and often have to stretch limited resources to get the job done.

Public Sector Salaries
Public employees usually enjoy good health insurance and retirement
benefits. However, public employees typically (not always) earn less than
employees in the private sector. Of course this depends on who you ask.
Many believe that public employees are overpaid. In general, public
employees tend to have less negotiating power when it comes to salary.
Salaries usually have a set pay range according to the type of position.
These pay bands are not negotiable unless they are adjusted as a whole
by a governing body. Pay raises are usually given across the board instead
of individual performance. This can be viewed as positive or negative
depending on your perspective. Pay raises at the local level are usually
approved by city council and everyone receives the same increase in
salary. For example, if the city government decides there is enough money
to raise salaries by 3%, everyone receives that percentage. Many feel that
this approach punishes those who perform well and rewards employees
that perform at an average level. Unfortunately, this system does not
encourage competition or a high level of performance. Many public
employees have not had raises in years. These conditions usually dont
motivate one to do their best. In addition, pay raises in the public sector
usually end up translating into increased fees and/or taxes. This tends to
add to the public scrutiny.


PRIVATE SECTOR EMPLOYMENT
Private employment consists of any work outside of local, state, and federal
agencies. Private sector employees provide us with the products and
services we use every day. Private sector employees are business owners,
financial institutions, contractors, and the list goes on and on. The private
sector is vital to our economy because they can produce more job
opportunities than the public sector. The public sector also benefits from
the private sector in the form of tax revenues. Its no secret that when the
private sector is doing well, everyone does well.
The private sector has more flexibility in just about every aspect of
employment. Business owners can set their own hours and can hire
employees without some of the strict guidelines of the public sector. I have
attempted to apply for several jobs with the federal government. However
some positions request a Masters degree in Social Work and will not
accept anything else. Of course, someone with a Masters degree in
Counseling can do the same job as someone with a Masters degree in
Social Work (Im not bitter though).


Revenue Focused
The private sector is more focused on revenue than the public sector.
Private sector businesses dont have the luxury of raising taxes when they
need to produce more revenue. Although the private sector provides a
service, the customer usually pays for the service on the spot (i.e.,
restaurant, store, etc.). If the service is subpar, we dont go back to that
store or restaurant. The citizen doesnt share the same choice when it
comes to public services. We all pay our taxes even when we are
displeased with our public services (At least I hope you do).

Private Sector Salaries
Private sector salaries tend to be more negotiable than the public sector.
Public sector employment usually has a standard hiring range and there is
little to no deviation. In most cases, private sector employment has more
potential for salary growth than the public sector. Private enterprise has
unlimited earning potential. Although high ranking public servants make
well into six figures, it still doesnt compare to CEOs in the private sector
that make millions per year.
In summary, the public and private sector both have their advantages and
disadvantages. However, they both play a vital role in our communities and
our economy. If your goal is to be rich, I wouldnt recommend public
employment. If you are a service driven person, then the public sector may
be a good fit. Public servants provide the essential services we need every
day. The private sector fuels our economy through taxes in addition to
producing goods and services. In the end, both sides benefit from each
other and need one another to keep our economy moving in the right
direction.

MANAGERIAL DIFFERENCES

There comes a stage in every companys lifecycle when going public
makes sense. It might be to maintain growth, pull off more aggressive
expansion, or bring on new shareholders to gain access to resources and
knowledge. Before doing so, a startup (or private company) should give
some thought to the differences between a private and public company,
especially in terms of what analysts and investors take into consideration
when valuating.

The term private company covers an array of businesses; all the way from
single-employee (non-incorporated) to startups, to former public companies
who became private after a buyout. This is how diverse the characteristics
are that make a company private, and with this diversity of characteristics
are equally diverse factors that analysts look at when valuating. Lets look
at five.
For all intents and purposes, a private company in this article is simply one
that is not listed on a public stock exchange, such as the JSE.

Size the cost of being public
Size might seem the most obvious meter of valuation, and it potentially is.
Size includes factors such as staff, income, balance sheets et al. From an
analysts perspective size has implications for the level of risk an investor
might take on. The general rule is small size equals more risk. This means
that risk levels and premiums are higher for smaller companies, which
analysts and investors take into account when estimating their ROI. A small
size can reduce growth prospects because there is less access to capital to
fund expansion.

However, on the other side of the valuation coin is the higher costs of
running a public company. This is not just because of larger operations,
staff etc. but also because the compliance costs to be publicly listed on a
stock exchange is quite high. So an investor will always look at whether the
financial benefits of being listed on a stock exchange outweigh the costs of
operating as a public company.

Overlap of shareholders and management
For most private companies, the shareholders are generally involved in the
management of the company. In many startups for example, the
shareholders are often the founders. This aligns shareholder and
management goals. A public company does not enjoy this luxury, and
pressure from, and reporting to, external investors (the shareholders) can
slow down the pace at which decisions get made. Analysts take this
alignment, or lack thereof, into account when valuating companies.

Shorter and longer-term investment strategies
This ties into stock price performance. A publicly listed company is under
pressure to have consistent growth rates and earnings as it directly relates
to its stock price performance. The smallest change can affect this
performance. For example, if a high-profile management employee leaves
a company, its stock might go down. Its all about perception.

Some investors also have a short-term trading strategy. This is particularly
true ever since the financial crisis struck in 2008. Short-term traders often
look at the month to month, or quarterly to quarterly performance and
expect results in that time period. This results in the management of a
public company trying to meet short-term goals rather than looking towards
the future.

Private companies are mostly invested into with the longer-term in mind.
VCs for example, often enter with a three to five-year plan before exiting.
This means management can work towards that five-year plan,
theoretically with more reward, and less immediate pressure. This is not
necessarily a pro or con one way or the other, but its definitely something
to bear in mind before taking your company public.

Quality and depth of management
A small private company like a startup, is theoretically less attractive to
high-quality management candidates because it cant match the salary or
benefits of a larger business. This means that startups generally have less
management depth than a public company which increases the risk in
valuation, as growth prospects are lower than they would be for a public
company with strong, experienced management candidates.

Quality of financial information and reporting requirements
One of the less glamorous differences between a private and public
company is the quality of financial information accessible to (potential)
investors. In short, private companies have lower quality and most likely
less detailed financial information than public companies. This increases
the risk, and the higher the risk, the lower the valuation.

Public companies though, have to meet requirements for submitting
financial reports which they often produce quarterly. These reports have to
be of a high quality, and contain sufficient detail, to please external
shareholders.

The lesson here is for startups to not overlook the importance of keeping
their books correctly, and also in being transparent when it comes to
receiving investment. Think of it this way, make the potential investors job
as easy as possible to get the information they need to make an educated
investment decision.











Customer orientation
The level of customer orientation as one of the main differences between
private and public sector organisations has been highlighted by a range of
secondary data authors including Beevers (2006) and Agness (2010).
Specifically, Beevers (2006) stresses that in private sector organisations
the level of customer orientation is significant due to the fact that the level
of achievement of organisational objectives is related to the level of
customer satisfaction in a direct manner,
Windrum and Koch (2008), on the other hand, point to specific training and
development programs private sector customer service representatives
receive and state that such type of programs are not available for the
majority of public sector customer service representatives mostly because
of funding issues.
Policy attitude Private Sector Public Sector
Status of customers Customers are hard to
attract and easy to lost due
to the competition
The level of interaction with
customers is determined by
relevant law regulations or
historic practice
Customer feedback Considered to be the main
indicator of performance
Analysed only in occasions
where the provision of the
service is being reviewed
Output measurement Measured in terms of what
customers are prepared to
pay and actually do pay (i.e.
revenue)
Measured in inputs (such as
manpower, equipment,
buildings), instead of outputs
(e.g. the level of health and
education of citizens)
Costs and investments The assessment of costs
and investments are done in
relation to what customers
are prepared to pay for the
output created by inputs
Cost control is done tightly
according to the government
budgets. The only factor to
be taken into account is the
needs for the service
The ability and willingness of
individuals to pay for the
services
The main criterion in terms
of the types of products to
be produced and the ways
they are going to be
marketed and serviced
Relevant only in a few
exceptional cases.