Differentiate between public limited company and private limited company
Differentiate between public limited company and private limited company
Public companies – Ownership rights (Shares) are traded on the stock exchange. Anyone can have part ownership of the company i.e. BT, Microsoft. Their accounts need to be audited and are of public information
Private company – Ownership is usually just a few people. These are commonly smaller businesses. Their shares are not traded on the stock exchange. Their accounts don’t need to be audited, and their financial statements are private
Minimum Paid-up Capital
Public limited company
Minimum paid-up capital of Rs. 5,00,000
Private limited company
Minimum paid-up capital of Rs. 1,00,000.
Minimum number of members
Public limited company
Minimum number of members 7
Private limited company
Minimum number of members 2
Maximum number of members
Public limited company
Unlimited number of members
Private limited company
Maximum number of members 50
Transerferability of shares Public limited company
No restriction
Private limited company
Can not transfer
Sales of shares
Public limited company
Public limited company can sell their shares
Private limited company
Private limited company cannot sell their shares
Allotment of shares
Public limited company
Restriction on minimum
Private limited company
No restriction
Issue of Prospectus
Public limited company
Public Company can issue a Prospectus
Private limited company
Private Company cannot issue Prospectus
Number of Directors
Public limited company
Public Company must have at least 3 directors
Private limited company Private Company may have 2 directors
Company Name
Public limited company
Use title LIMITED
Private limited company
Use title PRIVATE LIMITED
Consent of the directors
Public limited company
Consent was essential
Private limited company
No need to consent
Qualification shares
Public limited company
Sign required for an undertaking
Private limited company
No need to sign an undertaking
Commencement of Business
Public limited company
Cannot start its business until a Certificate to commencement of business is issued
Private limited company
Start business after its incorporation
Promoters Public limited company
7 promoters are required
Private limited company
2 promoters are required
Further issue of shares
Public limited company
Has to offer further shares to general public
Private limited company
No need to issue further shares
Statutory meeting
Public limited company
Compulsory to call statutory meeting
Private limited company
Not compulsory to call statutory meeting
Quorum
Public limited company
Minimum 5 members required
Private limited company
Minimum 2 members required
Tax
Public limited company
Relief available tax
Private limited company No relief available for tax
Managerial remuneration
Public limited company
Should not increase by 11 %
Private limited company
No restriction on private limited company
Special privileges
Public limited company
No special privilege available
Private limited company
Special privilege available
Dissolution
Public limited company
Dissolved by court
Private limited company
Can be easily dissolved by members
DIFFERENCE BETWEEN PRIVATE COMPANY AND PUBLIC COMPANY
PRESENTED BY: DEBASIS BEHERA REGD NO:10HM08
What is company? An association of persons who contribute money or money’s worth towards a businessLord Lindley. Voluntary association formed and organized to carry on a business in the legal name of the association. Company formed and registered under company act.
What is private company? Business firm in the private (non-public) sector of an economy, controlled and operated by private individuals (and not by civil servants or government employees). Used also as an alternative term for private limited company.
What is public company? A public company is a company that has permission to offer its registered securities (stock, bonds etc.) for sale to the general public, typically through a stock exchange or occasionally a company whose stock is traded over the counter (OTC) via market makers who use non- exchange quotation services. Used also as an alternative term for public limited company.
Difference between public and private company PRIVATE LTD. No. of members can be 2 to 50. Minimum paid up capital of Rs one lakh. Minimum number of directors present should be 2. Can accept deposit only from members, directors or their relatives.
PUBLIC LTD. No. of members can be 7 to unlimited.
Minimum Paid up capital Rs five lakhs.
Minimum number of directors present should be 3. Can accept public deposits. 5
DIFFERENCE BETWEEN PRIVATE AND PUBLIC COMPANY PRIVATE LTD Should contain words “Private Limited”at the end of its name. Cannot invite public to subscribe for shares or debentures. Statement in lieu of prospectus not required even for first issue.
PUBLIC LTD Should contain word “Limited” at the end of its name. Can invite public to subscribe for shares or debentures. Statement in lieu of prospectus OR prospectus required. 6
DIFFERENCE BETWEEN PRIVATE AND PUBLIC COMPANY