Friday, January 25, 2013

Difference Between PVT LTD and PUBLIC LIMITED COMPANY


Difference Between PVT LTD and PUBLIC LIMITED COMPANY
Ltd company is otherwise known as public limited company and pvt ltd company is a private limited company. Under public limited there are private sector company and public sector company.
There are lots of differences. The major factor is number of shareholders and shareholding pattern. In Pvt. Ltd. Company the share holders comprise of close group of friends and relatives. A Pvt. Ltd. company can not make an offer for public to subscribe its shares. Where as a Ltd. Company can given an advertisement and invite general public to subscribe for its shares. Basically a Pvt. Ltd. company is a corporate version of partnership firm where as a Public Ltd. company is a full fledged corporate body. For a Pvt. Ltd. company minimum 2 shareholders are required whereas for Public Ltd. Company minimum 50 shareholders are required. A share holder of a Public Ltd. company can transfer his shares freely at the stock exchange where the shares are listed whereas in a Pvt. Ltd. Company a shareholder can not transfer his shares without the consent of other shareholders. Also shares of the Pvt. Ltd. company can not be listed on stock exchanges and hence can not be traded there like shares of a Public Ltd. company. These are some of the major points of difference. For more details you need to refer The Indian Companies Act 1956.

Following are the main points of difference
1. Minimum Paid-up Capital : A Private Company must have a minimum paid-up capital of Rs. 1,00,000, whereas a Public Company must have a minimum paid-up capital of Rs. 5,00,000.
2. Minimum number of members : Private limited company 2, Public Company 7.
3. Maximum number of members : Private Ltd. Company 50, no restriction of maximum number of members in a Public Company.
4. Transerferability of shares : There is complete restriction on the transferability of the shares of a Private Company through its Articles of Association , whereas there is no restriction on the transferability of the shares of a Public company
5 .Issue of Prospectus : A Private Ltd.Company cannot issue Prospectus, whereas a Public Ltd. Company Company can issue a Prospectus.
6. Number of Directors : A Private Company may have 2 directors, whereas a Public Company must have atleast 3 directors.
7. Consent of the directors : There is no need to give the consent by the directors of a Private Company, whereas the Directors of a Public Company must file with the Registrar a consent to act as Director of the company.
8. Qualification shares : The Directors of a Private Company need not sign an undertaking to acquire the qualification shares, whereas the Directors of a Public Company are required to sign an undertaking to acquire the qualification shares of the public Company .
9. Commencement of Business : A Private Company can commence its business immediately after its incorporation, whereas a Private Company cannot start its business until a Certificate to commencement of business is issued to it.
10. Shares Warrants : A Private Company cannot issue Share Warrants against its fully paid shares, Whereas a Private Company can issue Share Warrants against its fully paid up shares.
11. Further issue of shares : A Private Company need not offer the further issue of shares to its existing share – holders, whereas a Public Company has to offer 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.
12. Statutory meeting : A Private Company has no obligation to call the Statutory Meeting of the member, whereas of Public Company must call its statutory Meeting and file Statutory Report with the Register of Companies.
13. Quorum : The quorum in the case of a Private Company is TWO members present personally, whereas 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.
14. Managerial remuneration : Total managerial remuneration in the case of a Public Company cannot exceed 11% of the net profits, and in case of inadequat profits a maximum of Rs. 87,500 can be paid. Whereas these restrictions do not apply on a Private Company.
15. Special privileges : A Private Company enjoys some special privileges, which are not available to a Public Company.

















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