Difference Between Public And Private Company | Pros And Cons
In the business glossary, there is a Vast Difference Between Public And Private companies. A public company publicly owns and operates its business publicly and around seven people need to set up Public Ltd Company.
While on the other hand, a private company is organized closely and requires at least two or more persons for its formation. Let’s discuss the benefits of Pvt Ltd. and Public Ltd Company through this article.
Difference Between Public And Private Company
What is a Public Ltd. Company?
Public Limited Company is an association of persons formed voluntarily which is started least amount capital of INR 5,00,000. Also, you can say it is the mutual stock company formed and listed under The Indian Companies Act.
In such types of company there is no definite limit of members and also no restrictions of sharing transferability of the shares. The company can invite the public for subscribing to shares or debentures, and that is why the word ‘public limited’ is added to its name.
Comparison Between Public And Private Company
Basis For Comparison
Public Company
Private Company
Meaning
Pvt Ltd corporations are
owned and traded publicly
A Private company
are owned and
traded privately.
the least amount of Members
7
2
Maximum members
Unlimited
200
Minimum Directors
3
2
Minimum paid up capital
INR 5,00,000
INR 1,00,000
Suffix
Limited
Private Limited
Statutory Meeting
Compulsory
Optional
Issue of prospectus / Statement in lieu of prospectus
Obligatory
Not required
Quorum at AGM
5 members must present in person.
2 members must
present in person.
Start of business
After receiving certificate of incorporation and certificate of commencement of business.
After receiving
certificate of incorporation.
Transfer of shares
Free
Restricted
Public subscription
Allowed
Not allowed
Key Factors of Public and Private Ltd. Company
Don’t you know ‘What is the difference between public and private company?’ Here we have displayed some points through which your doubts get removed.
4 Differences Between Public And Private Company
Recognized Stock
A public company refers to a company that is listed on a recognized stock exchange and does business in public. A Private Limited, The Company is one that is not listed on the stock exchange and is organized privately by the members.
Transferability Of Shares
It is one of the major Differences between a Public Limited Company and a Private Limited Company. In a private Limited Company, The transferability of shares is completely restricted. While on the other hand, the shareholders of a public company can freely transfer their shares.
Minimum Subscription
Private Organizations can easily allot their shares as they need to wait for the completion of the minimum subscription limit Whereas, Public companies can’t allot their shares before the completion of the minimum subscription of shares.
Issue of Prospectus
A Private Company doesn’t have the authority to invite the public to subscribe of its shares, so it can’t issue Prospects. While on the other hand, a Public Company is free to invite the public for a subscription of its shares, so it issues a Prospectus freely.
Benefits Of The Public And Private Company
Advantage of Public Limited Company
· Raising capital through public issue of shares
· Widening the shareholder base and spreading risk
· Growth and expansion opportunities
· Prestigious profile and confidence
· Other finance opportunities
· Transferability of shares
Advantage Of Private Limited Company
· Stability due to Limited Liability
· Long and continuity of Existence
· Minimum requirement of shareholders and members
· Capacity to sue and be sued
· Free & Easy transferability of shares
· Uninterrupted existence
· Separate Legal Entity
· Tax Advantages
After discussing the above facts of organizations, Individuals can easily distinguish the Difference Between Public And Private Company.
Natasha Roy is a Blogger and Educational Consultant at the top Sarkari Naukri Portal In India- Naukaricareer.com. She has 10+years of experience and loves to write educational blogs. Her hobby to playing Badminton and reading books.
