In the business glossary, there is a Vast Difference Between Public And Private companies. A public company publicly owns and operates its business publicly and around seven people need to set up Public Ltd Company.
While on the other hand, a private company is organized closely and requires at least two or more persons for its formation. Let’s discuss the benefits of Pvt Ltd. and Public Ltd Company through this article.
Difference Between Public And Private Company
What is a Public Ltd. Company?
A Public Limited Company is an association of persons formed voluntarily which is started least amount of capital of INR 5,00,000. Also, you can say it is a mutual stock company formed and listed under The Indian Companies Act.
In such types of companies, there is no definite limit of members and also no restrictions on sharing transferability of the shares. The company can invite the public for subscribing to shares or debentures, and that is why the word ‘public limited’ is added to its name
Comparison Between Public And Private Company
| Basis For Comparison | Public Company | Private Company |
| Meaning | Pvt Ltd corporations are
owned and traded publicly |
A Private company
are owned and traded privately. |
| least amount of Members | 7 | 2 |
| Maximum members | Unlimited | 200 |
| Minimum Directors | 3 | 2 |
| Minimum paid up capital | INR 5,00,000 | INR 1,00,000 |
| Suffix | Limited | Private Limited |
| Statutory Meeting | Compulsory | Optional |
| Issue of prospectus / Statement in lieu of prospectus | Obligatory | Not required |
| Quorum at AGM | 5 members must present in person. | 2 members must
present in person. |
| Start of business | After receiving certificate of incorporation and certificate of commencement of business. | After receiving
certificate of incorporation. |
| Transfer of shares | Free | Restricted |
| Public subscription | Allowed | Not allowed |
Key Factors of Public and Private Ltd. Company
Don’t you know ‘What is the difference between public and private company?’ Here we have displayed some points through which your doubts get removed.
4 Differences Between Public And Private Company
Recognized Stock
Public company refers to a company that is listed on a recognized stock exchange and does business in public. A Private Limited, The Company is one which is not listed on the stock exchange and is organized privately by the members.
Transferability Of Shares
It is one of the major differences between a Public Limited Company and a Private Limited Company. In a private Limited Company, The transferability of shares is completely restricted. While on the other hand, the shareholders of a public company can freely transfer their shares.
Minimum Subscription
Private Organizations can easily allot their shares as they need to wait for the completion of the minimum subscription limit Whereas, Public companies can’t allot their shares before the completion of the minimum subscription of shares.
Issue of Prospectus
Private Company doesn’t have the authority to invite the public to subscribe to their shares, so they can’t issue Prospects. While on the other hand, a Public Company is free to invite the public for subscribing to its shares, so it issues a Prospectus freely.
Benefits Of The Public And Private Company
Advantages of Public Limited Company
- Raising capital through the public issue of shares
- Widening the shareholder base and spreading risk
- Growth and expansion opportunities
- Prestigious profile and confidence
- Other finance opportunities
- Transferability of shares
Advantage Of Private Limited Company
- Stability due to Limited Liability
- Long and continuity of Existence
- Minimum requirement of shareholders and members
- Capacity to sue and be sued
- Free & Easy transferability of shares
- Uninterrupted existence
- Separate Legal Entity
- Tax Advantages
After discussing the above facts about organizations, Individuals can easily distinguish the Difference Between Public And Private companies.
Author Bio’s
Natasha Roy is an educational counselor at Naukaricareer ( Best Sarkari Naukri Site In India). She has 05 years’ experience and has deep knowledge in educational departments. Apart, she is a good player in Badminton and her hobby is to read novels.
