SOME DIFFERENCES BETWEEN PUBLIC AND PRIVATE JoINT STOCK COMPANIES
1. A private company may be formed with a minimum capital of one million Rials (Rls. 1.000.000). The public company must start with a minimum capital of five million Rials (Rls. 5.000.000).
2. The founding shareholders of a public company are required to subscribe at least 20 percent of the initial capital and to pay in at least 35 percent of the subscription. The founding members of a private company must secure subscriptions to 100 percent of the capital and pay in a minimum of 35 percent of the cash capital and 100 percent of the non-cash capital.
3. The board of directors of a public company must consist of a minimum of five directors. A private company may operate with a board of two directors.
4. Directors of a private company are permitted a bonus of 10% of dividends. Directors of a public company may be voted a bonus of only 5% of dividends.
5. When a public company is organized, a founders meeting is required at which a number of formalities must be observed. This meeting is not required for the founders of private companies, although it is desirable to hold such a meeting.
6. The annual financial reports of public companies must be certified by officially recognized accountants. This requirement is not strictly applicable to private companies.
7. The public company is limited in the maximum nominal value which it may assign to each share of stock to Rls. 10.000. The private company is not so limited.
8. The raising of additional capital by a public company requires the preparation and filing of a prospectus with the Companies Registration Office. A private company need only submit to the Companies Registration Office a resolution and declaration when
raising its capital.
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