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Key Differences

Know the Differences & Comparisons

Difference Between Pvt Ltd and Public Ltd Company

Last updated on January 8, 2019 by Surbhi S

public vs private companyA private company is a closely held one and requires at least two or more persons, for its formation. On the other hand, a public company is owned and traded publicly. It requires 7 or more persons for its set up. There are vast differences between Pvt Ltd. and Public Ltd Company.

In the business glossary, it is no wonder that the term company is used commonly. It is that form of business organization, which enjoys certain advantages over other forms such as sole proprietorship or partnership. A company is an artificial person, that come into existence through a legal process, i.e. incorporation.

So, it features, separate legal entity, perpetual succession, limited liability, common seal, can sue and be sued in its own name. Basically, there are two types of companies, i.e. Private company (Pvt Ltd. Company) and Public Company (Public Ltd. Company).

Content: Public Ltd. Company Vs Private Ltd. Company

  1. Comparison Chart
  2. Definition
  3. Key Differences
  4. Video
  5. Conclusion

Comparison Chart

Basis for ComparisonPublic CompanyPrivate Company
MeaningA public company is a company which is owned and traded publiclyA private company is a company which is owned and traded privately.
Minimum members72
Maximum membersUnlimited200
Minimum Directors32
SuffixLimitedPrivate Limited
Start of businessAfter receiving certificate of incorporation and certificate of commencement of business.After receiving certificate of incorporation.
Statutory Meeting CompulsoryOptional
Issue of prospectus / Statement in lieu of prospectus ObligatoryNot required
Public subscriptionAllowedNot allowed
Quorum at AGM5 members must present in person.2 members must present in person.
Transfer of sharesFreeRestricted

Definition of Public Ltd. Company

A Public Limited Company or PLC is a joint stock company formed and registered under The Indian Companies Act, 2013 or any other previous act.

There is no defined limit on the number of members the company can have. Also, there is no restriction on the transferability of the shares. The company can invite the public for the subscription of shares or debentures, and that is why the term ‘Public Limited’ gets added to its name.

Definition of Private Ltd. Company

A Private Limited Company is a joint stock company, incorporated under The Indian Companies Act, 2013 or any other previous act. The maximum number of members is 200, excluding the current employees and the ex-employees who were the members during their employment or continues to be the member after the termination of employment in the company.

The company restricts the transfer of shares and prohibits invitation to the public for the subscription of shares and debentures. It uses the term ‘private limited’ at the end of its name.

Key Differences Between Public and Private Ltd. Company

The difference between public and private company can be drawn clearly on the following grounds:

  1. The public company refers to a company that is listed on a recognised stock exchange and traded publicly. A Private Ltd. the company is one that is not listed on a stock exchange and is held privately by the members.
  2. There must be at least seven members to start a public company. As against this, the private company can be started with minimum two members.
  3. The is no ceiling on the maximum number of members in a public company. Conversely, a private company can have a maximum of 200 members, subject to certain conditions.
  4. A public company should have at least three directors whereas the Private Ltd. company can have a minimum of 2 directors.
  5. It is compulsory to call a statutory general meeting of members, in the case of a public company, whereas there is no such compulsion in the case of a private company.
  6. In a Public Ltd. Company, there must be at least five members, personally present at the Annual General Meeting (AGM) for constituting the requisite quorum. On the other hand, in the case of Private Ltd. Company, that number is 2.
  7. The issue of prospectus/statement instead of the prospectus is mandatory in case of a public company, but this is not the case with the private company.
  8. To start a business, the public company needs a certificate of commencement of business after it is incorporated. In contrast, a private company can start its business just after receiving a certificate of incorporation.
  9. The transferability of shares of a Pvt. Ltd. company is completely restricted. On the contrary, the shareholders of a public company can freely transfer their shares.
  10. A public company can invite the general public for subscribing shares of the company. As opposed, a private company has no right to invite public for subscription.

Video: Private Limited Vs Public Limited Company

Conclusion

After discussing these two entities, it is very clear that there are so many aspects which distinguish them. Apart from the above-mentioned differences, there are many other differences like, a public company can issue share warrant against its fully paid share to the shareholders, which a private company cannot.

The scope of Private Ltd. The company is limited, as it is limited up to a few numbers of people, and enjoys less legal restrictions. On the other hand, the scope of a Public Ltd. company is vast, the owners of the company can raise capital from the general public and have to abide by several legal restrictions.

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Comments

  1. MUSTAPHA ADAM says

    November 27, 2015 at 11:54 am

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    Reply
    • Jessica Thomas says

      October 26, 2016 at 2:09 pm

      Sure it’s very easy and simple to understand.

      Reply
  2. sebi says

    June 19, 2016 at 11:28 pm

    This is a proper definition of both companies,thanx for helping us

    Reply
  3. Samuel v says

    September 14, 2016 at 7:30 pm

    Nice, It also helped me in my assignments in school.
    Can you put comparison of different forms of business organizations?, not everything, like
    Sole proprietorship
    Partnership
    Co-operative society&
    Company- Pvt. & Public…

    Reply
    • Surbhi S says

      October 22, 2016 at 10:31 am

      Thanks and we will soon update the difference on the site, keep viewing.

      Reply
  4. Also me ur fan says

    November 8, 2016 at 11:44 pm

    I am even studying this for exams thank u very much

    Reply
  5. indhu pavul says

    December 19, 2016 at 12:17 pm

    Perfect article.

    Reply
  6. Ramanuj Prasad says

    December 24, 2016 at 8:26 pm

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    Reply
  7. Rakesh Sharma says

    April 12, 2017 at 3:34 pm

    Great , I Am fully satisfied.

    Reply
  8. Vishal Gupta says

    July 12, 2017 at 4:34 pm

    This is a very clear and cut difference. I am fully satisfied with this meaningful data.

    Reply
  9. Achal says

    July 20, 2017 at 11:22 pm

    Thanks for writing in such a way that it is so easy to understand.

    Reply
  10. ANAND says

    November 9, 2017 at 10:44 am

    Nice article.

    Reply
  11. Peter Morris says

    December 7, 2017 at 12:30 am

    I am fully satisfied with this meaningful data.This is a very clear and cut difference.

    Reply
    • Surbhi S says

      December 7, 2017 at 9:41 am

      To all the readers,
      Thank you all for appreciating the articles, it means a lot to us. Keep liking, sharing and reading. 🙂

      Reply
  12. Sajal says

    December 13, 2017 at 6:55 am

    Nice article.very easy to understand.

    Reply
  13. Aann says

    December 14, 2017 at 4:04 pm

    Jindal comes in which category…??

    Reply
    • Surbhi S says

      December 14, 2017 at 4:07 pm

      It is a public company.

      Reply
  14. Likhit says

    August 25, 2018 at 10:57 am

    Just out of curiosity looked at this post. Thank you for your clear and simple explanation.

    Reply
  15. hassan duale says

    October 23, 2018 at 10:00 pm

    wow this is a nice article

    Reply
  16. Radha says

    November 7, 2019 at 9:27 pm

    It’s easy to understand Thankyou🥰🤗🤗

    Reply

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