What is the main difference between a private limited company and a public limited company?
Difference between Public and Private company: Public limited company is owned by the government and shareholders and at least 7 members are required for its establishment. Whereas Private Limited Company is a company owned by private individuals; For the installation of which at least 2 people are required.
Definition of Private Limited Company
It is an association of persons voluntarily formed with a minimum paid-up capital of Rs. 1,00,000. At least 2 people are required to open a private limited company. The maximum number of existing employees in a private limited company can be 200.
This type of company is not allowed to sell its shares to the public or common people. If all these features are found in a company, then that company has to use the word 'Private Limited' at the end of its name.
Definition of Public Limited Company
A Public Limited Company or PLC is a Joint Stock Company. It is an association of persons voluntarily established with a minimum paid-up capital of Rs. 5 lakhs. At least 7 members are required to open this type of company but there is no upper limit for the maximum number of members.
There is no restriction on the transfer of shares in this type of company. The company can sell shares or debentures to the general public; And this is the reason why the word 'Public Limited' is added to the name of such companies.
Key Differences Between Private Limited Company and Public Limited Company
1. There should be at least seven members to start a Public Limited Company. In contrast, a private company can be started with a minimum of two members.
2. There is no limit on the maximum number of members in a public limited company; In contrast, a private company can have a maximum of 200 members.
3. A public limited company is a company that is listed on a recognized stock exchange and is publicly traded while a private limited company is a company that is not listed on a stock exchange and is owned by The rights remain with its owners.
4. The size of a private limited company is smaller than that of a public company and the financial resources are also less.
5. A Public Limited Company must have at least three directors, while it is mandatory to have at least 2 directors in a Private Limited Company.
6. In the case of a public company, it is mandatory to call a general meeting of the members, while there is no such compulsion in the case of a private company.
7. In the case of a public limited company, at least five members must be present in person at the meeting to constitute the quorum for the Annual General Meeting (AGM). In case of a private limited company, this number should be 2.
8. It is mandatory for a public limited company to issue a prospectus or make a statement in lieu of prospectus whereas such provision is not there in the case of a private company.
9. The shareholders of a public limited company can freely transfer/sell their shares while a private limited company is not allowed to do so.
10. To start a business, a public company needs a certificate of commencement of business after its incorporation; In contrast, a private company can start its business immediately after obtaining the Certificate of Establishment.
11. The profit from a public limited company goes to the government and the shareholders of the company while the profit from a private limited company goes to the private people.
On the basis of the above mentioned differences, it can be said that there is a lot of difference between these two types of companies (Difference between Public and Private company). The ownership of a public limited company is in the hands of the government and a private limited company is owned by a private person.