Let us know what is the difference between a public and a private company. You know that there are many companies in our country and world who are related to different types of business. Some of them are private companies and some are public. But do you know that public and private companies are quite different from each other. In this case, why not understand the difference between them today. So let’s talk about public and private companies today.
A private limited company is a company owned by private people; Which requires at least 2 people to set up. The public limited company is held by the government and shareholders, and at least 7 members are required for its establishment. This article is telling about 11 such differences about private limited company and public limited company, which is very important for any ordinary human to know.
What is the Difference Between a Public and a Private Company?
- Public company refers to a company that is listed on a recognized stock exchange and is publicly traded. A private limited company is one that is not listed on the stock exchange and is privately held by members.
- There must be at least seven members to start a public company. In contrast, a private company can be started with a minimum of two members.
- There is no limit to the maximum number of members in a public company. In contrast, a private company may have a maximum of 200 members, subject to certain conditions.
- A public company should have at least three directors while a private limited company can have a minimum of 2 directors.
- In the case of a public company, it is mandatory to call a statutory general meeting of members, whereas in the case of a private company there is no such obligation.
- In a public limited company, the annual general meeting (AGM) must constitute at least five members to constitute the required quorum. On the other hand, in the case of private limited company, that number is 2.
- In the case of a public company, the issue of prospectus / statement is mandatory instead of prospectus, but it is not so with private company.
- To start a business, a public company needs a certificate of starting a business after joining it. Conversely, a private company can start its business after obtaining a certificate of incorporation.
One Pvt. Transferability of shares of. Limited company is completely banned. In contrast, shareholders of a public company can freely transfer their shares.
- A public company may invite the general public to subscribe to the shares of the company. As opposed, a private company has no right to invite the public for membership.
Definition of Private limited Company
A private limited company is a joint stock company, established under the Indian Companies Act, 2013 or any other previous Act. It is a consortium of voluntarily formed individuals with a minimum paid-up capital of Rs. 1,00,000. A minimum of 2 people is 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 general public. If all these characteristics 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 registered under the Indian Companies Act, 2013 or any other previous Act. It is an association of voluntarily established individuals with a minimum paid-up capital of Rs. 5 lakhs. To open this type of company, a minimum of 7 members is required but there is no upper limit for maximum members.
There is no restriction on transfer of shares in this type of company. The company may sell shares or debentures to the general public; And this is why the word ‘public limited’ is added to the names of such companies.