Difference between ltd plc

Difference between Private Limited Company and Public limited company setup

1. Private Limited Company and Public Limited Company

2. 1. Separate Legal Entity – Artificial Person- Just like a Human being 2. Perpetuity: ... No End, it will continue for ever 3. Limited Liability : Lability is fixed to the sum invested by the share holder not more than that... 4. Number of Members: Unlimited number of Members Public Ltd Co, ... 5. Separation of Ownership from Management :------------ ------- Management of the company is different from Real Owners ... 6. Transferability of Shares : Easy to sell and buy shares ... 7. Rigidity of Objects : Ultra vires/ Fixed Objectives ... 8. Financial Resources : Invite the public to invest 9. Corporate veil – Protection from Law 10. Memorandum of Association - Heart of the company 11. Articles of Association – Brain of the Company 12. Listing in Stock Exchanges – Value of the share Increases 13. Winding up of a Company - Death of a company SALIENT FEATURE OF THE JOINT STOCK COMPANY

3. Limited companies Limited companies are very different from partnerships and sole proprietorships. In these latter business types, the owners are the business. In contrast, limited companies are: owned by shareholders run by directors

4. Setting up a limited company Unlike sole proprietorships and partnerships, which are simple to set up, limited companies must produce paperwork and follow certain procedures when setting up . All limited companies in the UK have to register with the Registrar of Companies at Companies House . In return, they are issued with a Certificate of Incorporation . This is an official document which shows that the company has come into existence. In addition, a limited company must produce: a Memorandum of Association , which they are, where they are based and what they do. an Articles of Association - an internal ‘rulebook’, which sets out how the business will be run.

5. Types of limited companies: Have you ever seen the letters ‘ Ltd ’ or ‘ PLC ’ after a company’s name? Do you know what they stand for? There are two types of limited company: ‘Ltd’ or ‘Limited’ after a company’s name tells you it is a private limited business. ‘PLC’ after a company’s name tells you it is public limited .

6. Public limited companies  Private limited companies become public by floating their shares on the stock market, to be bought and sold by the public. They do this in order to raise capital for expansion.  With a greater number of shareholders, public limited companies are able to grow at a faster rate than companies which remain private. EX: Large British companies, like Tesc, Boots, Marks and Spencer and Barclays are panies.

7. Public limited companies

8. Advantages • Limited Liability for shareholders • Even if a shareholder(s) leaves the PLC or dies, the business can continue’s. • The shares of the PLCs are freely transferable. • This provides liquidity for shareholders.

9. Disadvantages • There are many legal formalities to starting a public limited company • There is a possibility that the original owners can lose control of the public limited company in the issue of a dispute or violation. • Some public limited companies can grow very large. As a result, many can suffer from mismanagement and slow decision making .

10. Private Limited Company  A private limited company is where between one and ninety nine people come together and form a business  The owners are called shareholders and they invest money in the company  The profit is divided up among the shareholders and distributed in the form of “dividends”  “Ltd.” is written after the name of the company  The annual accounts are sent to the Registrar of Companies. They are not published

11. Forming a Private Limited Company • The people involved in forming a company are called the promoters • The promoters employ: • You need 1 - 99 people who invest money and are shareholders - An accountant - for financial advice - A solicitor - to prepare the legal documents which must be sent to the Companies Registration Office (CRO)

12. Forming a Private Limited Company Now the Promoters company can begin trading Hire… Certificate of Solicitor Who completes… Incorporation Sent to… Form A1 Companies Memorandum of Association Registration Articles of Association Office (CRO)

13. Advantages of a Private Limited Company • Shareholders have limited liability • Extra capital is available to fund expansion of the business • Continuity of existence

14. Disadvantages of a Private Limited Company • Costly to set up • A lot of legal requirements when forming a company • Shares cannot be transferred to the general public

15. Income Tax slab 30% Income tax For Both Pvt. L.td Co. and Plc. Ltd. Co. Nil Surcharge 3% Education Cess

16. Conclusion  If you have a small capital, then Private Co. is preferable or if you have a large capital and if you want to have a large share in the market, you can form a Public Co.

17. Differnces: PLC • Can quote shares in stock exchange. • Two directors are needed for PLC. • Annual accounts must be filed for every six months . • Shares are easily transferable Ltd • Can’t quote shares in stock exchange. • Only one director is needed . • Annual accounts must be filed for every nine months . • Shares cannot be transferable