Difference between Public Limited Company & Private Limited Company

Presented by Priya G S Shibna

Contents
What is a company? Public Limited Company Private Limited Company Difference Between Ltd. Company & Pvt.Ltd.Company

Company
A company can be defined as an "artificial person", invisible, intangible, created by Law, with a discrete legal entity, perpetual succession and a common seal. It is not affected by the death, insanity or insolvency of an individual member.

Types of Companies
Public Sector: These organisations are financed by the state and they do not operate in order to make a profit but to provide a public service. Eg: Schools, hospitals, libraries, police and the national defense. Private Sector: These organisations operate in order to make a profit and are split into 2 categories:

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Un-limited companies It can be either a sole trader or partnership. The owner(s) will be personally liable for all of the debts if the business fails. There is no legal requirement for non-limited companies to make any of their financial information public.

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Limited companies Public Limited Private limited The liability for both Ltd's and Plc is limited. This means that if the company fails, the liability of the company's shareholders is limited to the value of the shares and not their personal funds.

Ltd. Company
A limited company is a company in which the liability of the members or subscribers of the company is limited to what they have invested or guaranteed to the company. Kinds of Ltd. Co. o Private company limited by guarantee o Private company limited by shares o Public limited company

Pvt. Ltd. Company

Section 3 (1) (iii) defines a private company as one which Has a minimum paid-up share capital of Rs.One Lakh or such higher capital as may be prescribed; and By its Articles Association: Restricts the right of transfer of its share; Limits the number of its members to 50 which will not include:
Members who are employees of the company; and Members who are ex-employees of the company and were members while in such employment and who have continued to be members after ceasing to be employees

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Prohibits any invitation to the public to subscribe for any shares or debentures of the company; and Prohibits any invitation or acceptance of deposits from persons other than its members, directors or their relatives.

Public Ltd. Vs Pvt.Ltd. Company

Public limited company Minimum of three members Unlimited Required to have the suffix limited(Ltd.) or incorporated(Inc.) Minimum paid up capital/shares is 5Lakh Shares cannot be transferred Private limited company Minimum of two members Maximum of 50 Mandatory to enclave Private Limited(Pvt. Ltd.)

Minimum paid up capital is 1Lakh Shares can be transferred

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Should have at least three directors Can commence business after obtaining registration certificate Should have at least two directors Can commence business immediately after the incorporation