The Companies Act recognizes three principal company categories: private companies, public companies and companies not distributing profits.
Private company
A private company has restrictions on public sale of its shares and debentures. OCR and the Companies Act recognize single-shareholder private companies, and the Act generally limits a private company's shareholders to no more than 101 unless a specific exception applies.
Public company
A public company is a company other than a private company. The Act requires at least seven promoters for incorporation of a public company, subject to the statutory exception where one public company establishes another public company. Public companies are subject to stricter governance and capital-market rules.
Company not distributing profits
This structure is designed for objectives other than distributing profits to members. Under the Companies Act, at least five promoters are generally required, and membership cannot fall below five after incorporation. Profits are not distributed to members as dividends.
Choosing a structure
The correct form depends on the proposed ownership, fundraising model, profit-distribution intention, governance and regulatory requirements.