What is the Difference Between A Public Limited Company And Private Limited Company?

There are various types of companies that are registered under the Indian Companies Act, 2013. But the most popular are the public limited company and the private limited companies. Both of these companies differentiate on the basis of their advantages and disadvantages. 

In this article, we will discuss the main difference between a public limited company and private limited company. 

Points of difference between a public limited company and private limited company

• All the shares of the private limited companies are in private hands and these companies are owned by the group of promoters. While the shares of the public limited companies are open for everyone and it is owned by the public. 

• The second difference between the public limited company and a private limited company is on the basis of number of shareholders. In a private limited company, it must have a minimum number of two and a maximum number of 200 members. On the other hand, there is no limit for a maximum number of shareholders in a public limited company while a minimum number is 7.

• Coming onto the shares, in a public limited company shares can be freely transferred while in a private limited company before transferring the shares, it is compulsory to seek the consent of the shareholders. A private limited company does not have a right to make the public offers of its shares. On the contrary, a public limited company can make the public offer through advertisements. 

• There are stringent rules and requirements to establish a public limited company whereas there are no such rules and requirements for a private limited company. 

• The shares of the public limited companies are listed in the stock exchange while it is not applicable in the case of a private limited company. This means trading can happen in a public limited company only in the stock exchange.

• Statutory meetings are compulsory for public limited company while it is optional for the private limited company. 

• In a public limited company, a minimum number of directors are 3 while in a private limited company it is 2.

• If we talk about the quorum at AGM, 5 members must be present in a public limited company and 2 members must be present in a private limited company. 

Advantages of public limited company and private limited company registration

Advantages of the public limited company registration:

• Continuity of existence

• Increased borrowing capacity

• Limited liability

Advantages of a private limited company:

• More Brand value

• Scope of expansion

• Limited liability

• Continuity of existence

• High valuation from loyal customers.

So, as concluded there are different advantages of a public limited company and a private limited company like public limited company is referred as a company that is traded publicly and is listed on a stock exchange, whereas a private limited company is held privately by its recognized members without any listing on the stock exchange. Whether you register your company as private limited or public limited, it is mandatory to register your company under the Indian Companies Act, 2013 Registering your company makes you capable of taking all the benefits allotted to a company under the act. Our advisors make the complex registration process simple and fast for our loyal customers. To get more information regarding the registration of a private limited company and a public limited company contact Swarit advisors.