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17 Key Differences Between Public Limited Company & Private Limited Company

Online Legal India LogoBy Online Legal India Published On 09 Jul 2022 Updated On 06 Jan 2023 Category Private Limited Company

A private limited company is a tightly held corporation that must be formed by at least two people. A public limited company, on the other hand, is owned and operated by the general public. It takes seven people to set it up.

What is meant by a Company?

The term "company" refers to a voluntary group of people formed to attain specific objectives. It is a separate legal entity, which means that the company and its members are two distinct individuals in the eyes of the law. Perpetual succession, a common seal, the ability to claim damages, and capital distributed into transferable shares are further features.

A Table of Comparison between the two

Grounds for Comparison

Private Limited Company

Public Limited Company

  1. Meaning

The term "private limited company" refers to a company that is not publicly traded and whose shares are owned privately by its members.

A public limited company is one that is listed on a well-known stock exchange and those whose shares are freely exchanged by the general public.

  1. Minimum no. of members

2

7

  1. Maximum no. of members

200, (can be exceeded after passing off a special resolution in the general meeting) & except in case of the one-person company

There is no limit. It is unlimited

  1. Minimum no. of directors

2

3

  1. Articles of Association (AOA)

It will have to draught its own articles of incorporation.

It can either draught its own articles of incorporation or use Table F.

  1. Share Transfer

Because of restrictions in the Articles of Association, private company shares are not readily transferable.

A public company's shares are freely transferable, meaning they may be exchanged on a public market called a stock exchange.

  1. Public Subscription

The public distribution of shares or debentures is forbidden.

It has the ability to issue shares or debentures to the general public.

  1. The minimum amount of allotment

Without a minimum subscription, the corporation can distribute shares.

The company will not be able to distribute shares unless the minimum subscription amount specified in the prospectus is met.

  1. Issue of prospectus

A private company is not allowed to put out a prospectus.

It has the alternative of issuing a prospectus or opting for private placement.

  1. Commencement of Business

It can begin operations as soon as it receives a certificate of incorporation.

 

After it is incorporated, it is required to get a certificate of commencement of business.

  1. Appointment of Directors

A single resolution can select two or more directors.

 

A single resolution can select only one director.

 

  1. Retirement of Directors

The directors are not needed to retire in order to keep their positions. The directors might be hired on a long-term basis.



 

By rotation, 2/3 of the number of directors must retire.

 

  1. Filing of Consent

To act as a director, directors do not need to file their consent.

Within thirty days following their appointment, directors must register their approval to function as directors with the Registrar.

  1. Place of holding Annual General Meeting

Annual General Meetings can be held in any location.

The Annual General Meeting (AGM) is usually held at the office of the registered or any other location where the registered office is located.

  1. Statutory Meeting

Optional

Compulsory

  1. Exemptions

Enjoy many exemptions & privileges

No such exemptions & privileges are enjoyed

  1. Quorum

A quorum is made up of two members who are physically part of this meeting, regardless of the number of members.

When the number of members on the day of the meeting is 1000 or fewer, 5 members must attend in person.

 

When the number of members on the day of the meeting is more than a thousand but less than 5000, 15 members must attend in person.

 

When the number of members on the day of the meeting exceeds 5000, 30 members must be present in person.

Private Limited Company

A Private Limited Company is one that is formed and registered under the Companies Act of 2013, or any other law in place at the time. It's a corporation whose stock isn't traded publicly and isn't listed on a recognised stock exchange. It imposes restrictions on the ability to transfer shares. The company's liability is restricted to the number of shares it owns.

The maximum no. of members is limited to 200, except for current workers and former who were members of the firm when they were employed and remained to be members after they departed.It's also worth noting that joint stockholders are considered the same as single members.

Requirements for Registration

  • The Company must have at least 2 adults acting as directors.

  • There can be a maximum of fifteen directors on the board.
  • A minimum of one director must be an Indian citizen and resident, with the remaining directors being foreign nationals.
  • A shareholder must be made up of 2 people.

Public Limited Company

A Public Limited Company, or PLC, is a joint-stock company formed and registered under the section of the Indian Companies Act, 2013 or any preceding legislation. It is a limited-liability corporation that is allowed to issue registered securities, such as shares or debentures, to the general public by asking them to register for its shares through an initial public offering (IPO) and is publicly listed on at least one stock exchange. The shareholders' responsibility is restricted to the amount of money they put into the company.

Requirements for Registration

  • A public corporation must have a minimum number of three directors to be formed.
  • A public business must have a minimum of 7 shareholders.
  • If self-attested copies of identification and address evidence are supplied, a Digital Signature Certificate of any 1 director is required.
  • It is necessary to have a Director Identification Number (DIN).
  • The company's object clause must be included in the application.

Conclusion

Therefore, from the above-discussed points it is clear that there are some key differences between private and public limited companies. One needs to understand the differences clearly for the betterment of his/her company registration process.

Online legal India provides you with all the details that are required for private company registration as well as public company incorporation. The experts are always available for your help and the charges that are being charged for the services are very nominal.

 

 


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