Difference between Private Limited Company and a Public Ltd Company

In India, two types of companies are limited by shares. Private Ltd Company and Public Limited Company. A Private Ltd Company has a minimum paid-up capital or more capital as prescribed by the Companies Act. Its Article of Association states that the company restricts the right to transfer its shares; Limits the number of its members from 2 to 50. Generally, On the other hand, a public limited company is not a private company and has at least 7 shareholders/subscribers. The minimum paid-up share capital is Rs. 5 lakhs.

Differences between private limited company registration and public limited company registration.

Private limited company

Private Ltd Company and Public Ltd Company a small comparison

In a private limited company, there should be a minimum of 2 owners and a maximum of 50 owners. In the case of a private limited company, there are restrictions regarding the transfer of shares. Normally, Shares of a private limited company cannot be transferred freely as can be done in the case of a public limited company. Be aware that public limited company shares can be transferred on the stock exchange without any restrictions.

A private limited company never invites people to buy its shares or debentures. It does not accept deposits from the public other than its owners, directors or their relatives.

Likewise, The minimum paid up share capital required for a Private Ltd Company is Rs. That is, before starting a business towards capital, the owners must first pool a sum of lakhs of rupees out of their pockets. Each private limited company must have the suffix “Private Limited” at the end of its name (eg XYZ Pvt. Ltd.).

Public limited company

Private Ltd Company and Public Ltd Company a small comparison

A public limited company is a type of joint stock Company. In the case of a public company, there are no restrictions on the transfer of shares. Public Limited Company shares can be transferred free of charge on stock exchanges. In a public limited company, there should be at least 7 members and there is no upper limit on the number of members a public limited company can have.

Normally, The minimum paid up share capital required for a public limited company is five lakh rupees. That is, before starting a business towards the capital, the owners must first pool a sum of five lakh rupees out of their pockets. Each public limited company must have the suffix “Limited” at the end of its name (eg XYZ Limited).

A public limited company must have 3 directors. Directors are representatives elected by shareholders or owners to conduct business on their behalf. Public Limited Company Directors must give their written consent to the Registrar to act as Company Director. They must sign to acquire the eligible shares of a given public limited company. A public limited company can start its operations only when it is certified to start a business.

Private limited company registration

Private Ltd Company is a well-known business in India. It is suitable for small to large scale companies. The shareholders / owners of a private limited company get limited liability to the lenders. In the case of default, lenders or banks can only make company assets. They cannot sell the personal assets of the directors unlike the ownership or partnership companies.

The company is a separate legal entity. So the company can buy and sell assets and that too possible in its own name. A company and its owners are two different legal entities. A company is a special legal person.

For private limited company registration, the following requirements are:

Private Ltd Company and Public Ltd Company a small comparison
  • The share capital for a new business should be at least Rs 1 lakh and above
  • There should be a minimum of 2 members and a maximum of 50 members
  • Members can also be company directors
  • The name of the company should add the words “Private Limited”
  • Private limited Company registration name registration is the first step in starting a private limited company. All the entrepreneur has to do is give the company names and at least 3 options of business items. Company registration experts at Filingpoint.com can help you choose company names.
  • They will have a lasting legacy. There is also the continuation of the company‚Äôs existence in the case of change of directors due to various reasons like death, bankruptcy, stock transfer etc.
  • Limited liability protection for directors or members.
  • Separate the legal scope.
  • Ease of funding from investors and venture capitalists.
  • Hire and attract talented professionals by giving them an employee stock option.
  • Limited to shares that reduce the risk of enemy capture.
  • In Private Limited Company registration ease of transfer of ownership.
  • Compared to public limited companies, the New Companies Act, 2013 allows more exemptions for a private limited company.
  • Easy to register and dissolve.
  • Facilitates growth and expansion.

Public limited company registration

Public Limited Company is abbreviated as PLC, a business entity that sells its shares to the public or trades securities in the stock market. Such companies gain access to substantial capital through a public issue of shares.

Limited Liability: In Public limited company registration all members or shareholders of a public limited company shall bear limited liability. If a company incurs losses under any circumstances, its shareholders are liable to pay the debts in proportion to the nominal value of their shares.

Total number of members: At least 7 members are required to set up a public limited company in India. There is no limit to the maximum number of members as per the provisions of the Companies Act, 2013.

Minimum Payment-Capital: A public limited company must have a minimum pay-up capital or a higher amount that can be adjusted from time to time.

Company Name:

It is necessary to add “Limited” in the suffix of every public limited company name.

Permanent Inheritance: Public limited companies are separate legal entities from their members. PLCs are subject to the law regardless of death, bankruptcy, insanity or bankruptcy of its members. This leads to a lasting legacy of the company.

Earn DSC and DIN: Public limited company registration requires to fill in the Company Incorporation form on the official MCA portal, the applicant must first obtain the DSC, followed by the proceeds for the DIN application.

Name Approval: Likewise, The next step is to get the name approved and check the availability of the name by applying in the e-Form RUN. At this stage, a company can nominate two names along with a fixed fee.

Filling out the Incorporation Form: Public limited company registration requires to fill out a single application in Form SPICE 32 now to include a public company and attach all required documents.

Hence the private and public limited companies have separate features and readers have been given wide knowledge about the two concerns and therefore choosing the right type of company is left to the choice of the readers.

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