The association of persons makes up the company, although there can be the different type of companies, which are distinguishable from each other on the basis of the shareholding policy and the certification they got for approval. The number of members including the directors of that company tells about the type of the company. The Public Company Ltd and the Private Company Limited are registered under different acts, but still that people often get perplexed while differentiating it between both the terms. The Public Limited Company has a minimum of the seven members and needs the certificate of commencement of business along with the Certificate of Incorporation to kick off the operations. Conversely, the private limited company requires at least two members with only the certificate of incorporation to commence the business activities.
What is Pvt Ltd Company?
The private individuals own the private limited company; to commence their operations at least two of the members are required along with the certificate of incorporation. The hand-picked people hold the shares of the private limited company. Mainly the shareholders in the private limited company are the close relatives, friends or the family members. The shares of the private limited company can’t be put up on the stock exchange, and if one of the shareholders wants to sell or transfer his share, the consent of all the shareholders is compulsory. The two of the shareholders can commence the private limited company. At the same time, the private limited company can have a maximum of fifty shareholders. In the mechanism and for the issuance of the prospectus, the general public can’t be engaged in this type of company. In the private limited company at least two directors are up on the charge and they have no compulsion of retirement at the specific age. The company enjoys various privileges which are usually lacking in the public Ltd company. The private limited companies have the compulsion to write the ‘Private Limited’ as the suffix to their names.
What is Public Ltd Company?
The general public owns the public LTD companies. So there is no limitation on the maximum members the company can have, and the shares can be freely transferred from one to another without the consent of any other shareholders. For the selling of shares or debentures, the general public can be engaged. To set up the public Ltd company at least seven members are required, and Certificate of commencement of business in addition to the Certificate of Incorporation is required mandatory in order to be operational. There are at least three directors in this type of the company and the one becoming the director needs to have the minimum number of shares. The public limited company is free to share the warrants, at the same time the transfer of shares is done easily as the shares are open up to the general public. There are not any specific privileges for the public limited company, and their results are the public document, and one of te general public can inspect them. The limited company has to follow the instructions of holding meetings at the regular intervals and also file regular reports to the Registrar. The ‘limited’ is added as the suffix in the name of the public limited company.
Pvt Ltd Company vs. Public Ltd Company
- Minimum of seven members is required for the public company to kick off its operations, whereas the private limited company requires at least two members.
- The private limited company can have a maximum of fifty shareholders while the public limited company can have the unlimited members.
- The shares of private company Ltd aren’t available on the stock exchange. Conversely, the shares of the public company are available to the general public.
- Certificate of commencement of business in addition to the Certificate of Incorporation is required by the public LTD company to commence their operations. On the other hand, the only Certificate of Incorporation is required to the private sector company to set operations.
- The shares of the public company can easily be transferred to anyone, whereas the transfer of shares of the private company is restricted as it needs the consent of all the shareholders.