The key difference between pvt and public co,

Difference between the Private Limited Company and Public Limited Company in India

1. Difference Between Pvt Ltd and Public Ltd Company Puttu Guru Prasad VIVA-VVIT

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 that of a sum invested by the share holder and not more than that... 4. Number of Members: Unlimited number of Members Public Ltd Co, ... 5. Separation of Ownership from Management : CEO is responsible legally 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 – Real Owners will get Protection from Law 10. Memorandum of Association - Heart of the company 11. Articles of Association – Brain of the Company 12. Listing in Stock Exchanges – It will Increase the Value of the shares 13. Winding up of a Company - Death of a company SALIENT FEATURE OF THE JOINT STOCK COMPANY

3. What is a share? Definition and meaning A share is a single unit of ownership in a company ,For example, if a company’s capital is Rs 1,00,000/-,each share face value is Rs.10/-, Then the formula to calculate no. of shares in the company= Total capital/ Face value of the share. ( You can assume share as a cinema ticket) In the above example the total capital is Rs. 1,00,000, and face value of the share is Rs.10/- Now calculate no. of shares in the company= 1,00,000/10 = 10,000 Shares. Now if you have Rs.2,00,000 in your hand, How many shares you can purchase? Again 2,00,000/10 = 20,000 Shares, that means you can purchase 20,000 shares in that company. Companies divide capital into shares as a means of raising capital. Shares are also known as stocks. There are two main types of shares: common shares, which British people call ordinary shares, and preference shares. Ordinary shareholders have voting rights and receive dividends according to profit levels. Whereas preferred shareholders don’t usually have voting rights but have priority in the payment of dividends. The value of a share that a company issues depends on its face value – the capital of a company divided by the total number of shares. A firm’s authorized capital refers to the maximum amount in shares it is allowed to sell.

4. Difference Between Pvt Ltd and Public Ltd Company A private company is a closely held one and requires at least two or more persons, for its formation. On the other hand, a public company is owned and traded publicly. It requires 7 or more persons for its set up. There are vast differences between Pvt Ltd. and Public Ltd Company. In the business glossary, it is no wonder that the term company is used commonly. It is that form of business organization, which enjoys certain advantages over other forms such as sole proprietorship or partnership. A company is an artificial person, that come into existence through a legal process, i.e. incorporation. So, it features, separate legal entity, perpetual succession, limited liability, common seal, can sue and be sued in its own name. Basically, there are two types of companies, i.e. Private company (Pvt Ltd. Company) and Public Company (Public Ltd. Company).

5. Definition of Public Ltd. Company A Public Limited Company or PLC is a joint stock company formed and registered under The Indian Companies Act, 2013 or any other previous act. There is no defined limit on the number of members the company can have. Also, there is no restriction on the transferability of the shares. The company can invite the public for the subscription of shares or debentures, and that is why the term ‘Public Limited’ gets added to its name.

6. Definition of Private Ltd. Company A Private Limited Company is a joint stock company, incorporated under The Indian Companies Act, 2013 or any other previous act. The maximum number of members is 200, excluding the current employees and the ex-employees who were the members during their employment or continues to be the member after the termination of employment in the company. The company restricts the transfer of shares and prohibits invitation to the public for the subscription of shares and debentures. It uses the term ‘private limited’ at the end of its name.

7. BASIS FOR COMPARISON PUBLIC COMPANY PRIVATE COMPANY Meaning A public company is a company which is owned and traded publicly A private company is a company which is owned and traded privately. Minimum members 7 2 Maximum members Unlimited 200 Minimum Directors 3 2 Suffix Limited Private Limited Start of business After receiving certificate of incorporation and certificate of commencement of business. After receiving certificate of incorporation.

8. BASIS FOR COMPARISON PUBLIC COMPANY PRIVATE COMPANY Statutory Meeting Compulsory Optional Issue of prospectus / Statement in lieu of prospectus Obligatory Not required Public subscription Allowed Not allowed Quorum at AGM 5 members must present in person. 2 members must present in person. Transfer of shares Free Restricted

9. Conclusion After discussing these two entities, it is very clear that there are so many aspects which distinguish them. Apart from the above-mentioned differences, there are many other differences like, a public company can issue share warrant against its fully paid share to the shareholders, which a private company cannot. The scope of Private Ltd. The company is limited, as it is limited up to a few numbers of people, and enjoys less legal restrictions. On the other hand, the scope of a Public Ltd. company is vast, the owners of the company can raise capital from the general public and have to abide by several legal restrictions.