Distinguish between Private Limited Company and Public Limited Company
The differences between Private Limited Company and Public Limited Company are :
| Point of Difference | Private Ltd. Company | Public Ltd. Company |
|---|---|---|
| 1. Definition | A company with minimum number of members of 2 and maximum of 200 shareholders, shares are non-transferable, cannot accept deposits from public, cannot issue shares and debentures in the market, is called a private limited company. | A company that has a minimum number of members of 7 and no maximum number of shareholders is specified, each share is transferable, can accept deposits from the public, can issue shares and debentures in the market, is called a public limited company. |
| 2. No. of members | Minimum membership of this company is 2 people and maximum is 200 people. | Minimum number of members of this company is 7, but the maximum number of members is unspecified. |
| 3. Name | ‘Private Limited’ is used at the end of such company names. | ‘Limited’ is used at the end of such company names. |
| 4. Number of Directors | Minimum number of directors in this company is 2. | Minimum number of directors in this company is 3. |
| 5. Issue of Shares and Debentures | Private Ltd. companies cannot issue shares or debentures to the public as per the Articles of Association. | A Public Ltd. company can apply for shares and debentures to the public with the help of a company prospectus. |
| 6. Transfer of shares | Shares in private ltd. companies are not freely transferable. | Shares in public ltd. companies are freely transferable. |
| 7. Commencement of business | There is no need to obtain permission to start business from the Registrar. But in this case also registration is required. | Business can be started after obtaining permission to start business from the Registrar. That is, registration is mandatory. |
| 8. Statutory Meeting | This company is not required to convene a statutory meeting. | Statutory meeting has to be convened compulsorily in this company. |
| 9. Notice of Meeting | In case of this company, the notice of the Annual General Meeting is not given 21 days in advance. | In case of these companies, 21 days prior notice of the Annual General Meeting is mandatory as per the Companies Act. |
| 10. Articles of Association | In this case, it is mandatory to formulate Articles of Association. | In this case, Articles of Association may not be formulated. |
| 11. Member list | In case of private ltd. company, it is not mandatory to keep a list of its members. | In case of public limited company, it is mandatory to keep a list of its members. |
Important Questions from this Chapter:
- Characteristics of Sole Proprietorship Business
- Characteristics of Company
- Distinguish between Partnership Business and Sole Proprietorship Business
- Features of Private limited Company
- Distinguish between Private limited Company and Public limited Company
- Disadvantages of Partnership Business
- Advantages of registration of Partnership Business
- Disadvantages of Private limited Company
- Merits of Cooperative Societies
- Steps in forming a Business
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