The term ‘public company’ has been defined under Section 3 (1)(iv) of the Companies Act, 1956. A ‘public company’ means a company which has a minimum paid-up share capital of Rs. 5lacs or such higher capital as may be prescribed and which is not a private company. Further, a private company which is a subsidiary of a public company shall also be considered as a public company.

There should be at least seven person to form a public company i.e the minimum number of member in public company is seven. A public company should have at least three directors. The name of public company must end with word ‘Limited’.

The provision regarding minimum paid-up share capital of Rs. 5 lacs shall also apply to the existing companies. The existing companies have to increase their paid-up to 5 lacs within a period of 2 years from the effective date of Companies (Amendment) Act, 2000 (i.e upto 13/12/2002). If an existing company does not enhance its paid-up capital with the said period, it will be written off by the Registrar of Companies as defunct company u/s 560