Difference between a Private Ltd. And Public Ltd.

Company
Base

Private Ltd.

Public Ltd.

A company to be Incorporated
as a Private Company must
have a minimum paid-up
capital of Rs. 1,00,000
Minimum number of members
required to form a private
company is 2
Maximum number of
members in a Private
Company is restricted to 50
There is complete restriction
on the transferability of the
shares of a Private Company
through its Articles of
Association
A Private Company is
prohibited from inviting the
public for subscription of its
shares, i.e. a Private
Company cannot issue
Prospectus
A Private Company may have
2 directors to manage the
affairs of the company
There is no need to give the
consent by the directors of a
Private Company

A Public Company must have

a minimum paid-up capital of
Rs. 5,00,000

8. Qualification shares :

The Directors of a Private

Company need not sign an
undertaking to acquire the
qualification shares

9. Commencement of
Business :

A Private Company can

commence its business
immediately after its
incorporation
A Private Company cannot
issue Share Warrants against
its fully paid shares

The Directors of a Public

Company are required to sign
an undertaking to acquire the
qualification shares of the
public Company
A Public Company cannot
start its business until a
Certificate to commencement
of business is issued to it.
A Public Company can issue
Share Warrants against its
fully paid up shares.

A Private Company need not

A Public Company has to offer

1. Minimum Paid-up
Capital :
2. Minimum number of
members :
3. Maximum number of
members :
4. Transerferability of
shares :

5 .Issue of Prospectus :

6. Number of Directors :
7. Consent of the directors :

10. Shares Warrants :

11. Further issue of shares :

A Public Company requires

atleast 7 members.
There is no restriction of
maximum number of members
in a Public Company.
There is no restriction on the
transferability of the shares of
a Public company
A Public Company is free to
invite public for subscription
i.e., a Public Company can
issue a Prospectus.
A Public Company must have
atleast 3 directors.
The Directors of a Public
Company must have file with
the Registrar a consent to act
as Director of the company.

offer the further issue of

shares to its existing share
holders

12. Statutory meeting :

A Private Company has no

obligation to call the Statutory
Meeting of the member,

13. Quorum :

The quorum in the case of a

Private Company is TWO
members present personally

14. Managerial
remuneration :

These restrictions do not

apply on a Private Company.

15. Special privileges:

A Private Company enjoys

some special privileges

the further issue of shares to

its existing share holders as
right shares. Further issue of
shares can only be offer to the
general public with the
approval of the existing share
holders in the general meeting
of the share holders only.
Public Company must call its
statutory Meeting and file
Statutory Report with the
Register of Companies.
In the case of a Public
Company FIVE members
must be present personally to
constitute quorum. However,
the Articles of Association may
provide and number of
members more than the
required under the Act.
Total managerial remuneration
in the case of a Public
Company cannot exceed 11%
of the net profits, and in case
of inadequate profits a
maximum of Rs. 87,500 can
be paid
Are not available to a Public
Company

The Difference Between Inc. & Ltd. & Co.

by Elizabeth Layne, Demand Media
If you're starting a small business you must decide its legal structure. Legal
structure is usually determined by the business type, the number of owners or
investors it has, and how tax and liability issues are best managed. After forming
the business, you'll likely use an abbreviation, such as "Inc.," after your business's
name. Some business terms are commonly abbreviated to save space in business
correspondence.

Inc.
"Inc." is the abbreviation for incorporated. A corporation is a separate legal entity
from the person or people forming it. Directors and officers purchase shares in the
business and have responsibility for its operation. Incorporation limits an individual's
liability in case of a lawsuit. The corporation, as a legal entity, is liable for its own
debts and pays taxes on its earnings, and can also sell stock to raise money. A
corporation is also able to continue as an entity after the death of a director or stock
sale. A corporation is formed according to state law, through application to the
secretary of state and filing articles of incorporation. Because corporations cost
more to administer and are legally complex, the U.S. Small Business Administration
recommends that small businesses not incorporate unless they become established
as a large company. In most states, corporations must add a corporate designation,
such as "Inc." after their business name.

Ltd.
"Ltd." is short for limited, or a limited company. This structure is used mostly in
European countries and Canada. In a limited company, directors and shareholders
have limited liability for the company's debt, as long as the business operates
within the law. Its directors pay income tax and the company pays corporation tax
on profits. Responsibility for company debt is usually limited to the amount a person
has invested in the company. A limited company can be set up in four different
ways. In some companies, a shareholder's liability is limited to specific
predetermined amounts, drawn up in a memorandum. These businesses are known
as "private company limited by guarantee," and shareholders are called guarantors.
Charities and social enterprise groups frequently use this structure. In England,
limited companies must also have a pay-as-you-earn system established for
collecting income tax payments and National Insurance contributions from all
employees.

Co.
"Co." is an abbreviation for company, a catchall phrase for an association of people
working together in a commercial or industrial enterprise, such as in a sole
proprietorship, limited liability company or corporation. For example, while the
Microsoft Corporation is located in Washington state, it is one of many companies
located there. Co., or company, does not carry meaning as a specific legal structure
on its own.

LLC
"LLC" means "limited liability company." An LLC brings together some features of
both business partnerships and corporations, although it is more like a partnership.
Owners, also called "members," are protected from liability, but the business's
earnings and losses pass through to owners, who report them on their personal
income taxes. This makes its structure less complex than that of a corporation, but
like a corporation, LLCs must offer stock. Members share profits as they like.
Members are considered self-employed and must pay self-employment tax. When a
member of the LLC leaves, the business is dissolved and the remaining members
decide if they want to start a new business. An LLC is also formed according to state
law, through application to to the secretary of state and filing articles of
incorporation. LLCs must also indicate in their names that they are an LLC or limited
company.

private limited company

A type of company that offers limited liability, or legal protection for its shareholders but that
places certain restrictions on its ownership. These restrictions are defined in the company's
bylaws or regulations and are meant to prevent any hostile takeover attempt.
The major ownership restrictions are:
1. shareholders cannot sell or transfer their shares without offering them first to
other shareholders for purchase,
2. shareholders cannot offer their shares to the general public over a stock
exchange, and
3. the number of shareholders cannot exceed a fixed figure (commonly 50).