Content: Private Limited Company Vs Public Limited

Company
Comparison Chart

BASIS FOR PRIVATE LIMITED PUBLIC LIMITED

COMPARISON COMPANY COMPANY

Meaning Private Limited Company Public Limited Company

refers to the company implies a company that is
which is not listed on a listed on a recognized stock
stock exchange and the exchange and whose
shares are held privately shares are traded openly by
by the members the public.
concerned.

Minimum number 2 7
of members

Maximum 200, except in case of Unlimited

number of one person company
members

Minimum number 2 3
of directors

Articles of It must frame its own It can frame its own articles
Association articles of association. of association or adopt
Table F.

Transfer of The shares of a private The shares of a public

Shares company are not freely company are freely
transferable, as there transferable, i.e. freely
are restrictions in Articles traded in an open market
of Association. called a stock exchange.
 BASIS FOR PRIVATE LIMITED PUBLIC LIMITED
COMPARISON COMPANY COMPANY

Public Issue of shares or It can invite the public to

Subscription debentures to the public subscribe to its shares or
is prohibited. debentures.

Issue of Prohibited from issuing a It can issue a prospectus or

prospectus prospectus. it can also opt for private
placement.

Minimum amount The company can allot The company cannot allot

of allotment shares, without obtaining shares unless the minimum
minimum subscription. subscription stated in the
prospectus is obtained.

Commencement It can start a business It requires a certificate of

of Business just after receiving a commencement of business
certificate of after it is incorporated.
incorporation.

Appointment of Two or more directors One Director can be

Director can be appointed by a appointed by a single
single resolution. resolution.

Filing of Consent Directors need Directors must file their

to act as Director not require the filing of consent to act as a director,
their consent to act as a within 30 days of
director. appointment with the
Registrar.

Retirement of The directors are not 2/3rd of the total number of

Directors by required to retire by directors must retire by
rotation rotation. The directors rotation.
can be permanent.

Place of Holding AGM can be held AGM is held at the

AGM anywhere. registered office or any
 BASIS FOR PRIVATE LIMITED PUBLIC LIMITED
COMPARISON COMPANY COMPANY

other place where the

registered office is situated.

Statutory Optional Compulsory

Meeting

Quorum 2 members who are 5 members are required to

personally present at the present in person when the
meeting, constitute a number of members as on
quorum, irrespective of the date of the meeting is
the number of members. 1000 or less.

15 members are required to

present in person when the
number of members as on
the date of the meeting is
more than 1000 but less
than 5000.

30 members are required to

present in person when the
number of members as on
the date of the meeting is
more than 5000.

Exemptions Enjoys many privileges No such privileges and

and exemptions. exemptions.

Definition of Private Limited Company

A private limited company is a company that is created and incorporated

under the Companies Act, 2013, or any other act being in force. It is a
company that is not listed on a recognized stock exchange and
whose shares are not traded publicly. It restricts the right to transfer
shares the liability of the company is limited to the number of shares held
by them

There is a limit on the maximum number of members, i.e. the number of

members cannot be more than 200, excluding current employees and
ex-employees who were members of the company when they were
employed and continued to become members even after they left the
company. Further, one should take note of the fact that joint holders of
shares are treated as single members.

Further, in a private company, any sort of invitation to the public to

subscribe for shares is prohibited.

1. If a registered office is set up in an owned property, ownership

property documents are needed.
2. Utility bills of the business place

Definition of Public Limited Company

A Public Limited Company or PLC is a joint-stock company that is

created and incorporated under The Indian Companies Act, 2013 or any
other act being in force previously. It is listed on a recognized stock
exchange to raise capital from the general public.

It is a company with limited liability and is permitted to issue registered

securities i.e. shares or debentures to the public, by inviting them to
subscribe for its shares through IPO and is traded openly on at least one
stock exchange. The liability of the shareholders is limited to the extent
of the amount contributed by them.

Points to be noted

 As per Section 185 of Companies (Amendment) Act, 2017,

there is a complete ban on providing loans, guarantees, or
advances to the Directors or its holding company, or any partner of
the Director or any firm wherein the Director or relative is a partner.
 The maximum number of Directors that a company can appoint
is 15. However, a company can appoint more than 15 Directors by
passing a special resolution at the general meeting.

Key Differences Between Private and Public Limited

Company
After learning about the meaning of the two types of companies, let us
understand the difference between a private limited company and a
public limited company:

1. The public limited company refers to a company that is listed on a

recognized stock exchange and its securities traded publicly in an
open market. On the other hand, a private limited company is one
that is not listed on a stock exchange, as its stock is held privately
by the members.
2. A private limited company has to frame its own articles of
association, whereas a public limited company has two choices,
i.e. either it can frame its own articles or it can adopt Table F.
3. When it comes to the transfer of shares, there are restrictions in
the articles of association regarding the transferability of the
shares of a private company. Further approval of the Board of
Directors is needed for such transfer. In contrast, there is no
restriction on the transfer of shares in the case of a public limited
company i.e. freely traded in an open market called a stock
exchange.

4. A private limited company is strictly prohibited from inviting the

public to subscribe for its shares or debentures, whereas a public
limited company can go for a public subscription to raise capital,
through an IPO.
5. A private limited company cannot issue a prospectus. It may issue
shares by way of private placement by following the procedure
given in Part II of Chapter III. Conversely, a public limited company
can issue a prospectus by following the procedure given in part I of
Chapter III or it can also opt for private placement by following the
procedure contained in Part II of Chapter III.

6. A private company can allot shares, even when it has not received
a minimum subscription. Oppositely, a public company is restricted
from alloting shares to the public unless the minimum subscription
stated in the prospectus is received.
7. To form a private limited company minimum of two members are
required, whereas in the case of a public limited company at least
seven members must be there for its formation.
8. A private limited company can have a maximum of 200 members,
except in the case of one person company, where there is one
member. In contrast, in a public limited company, there can be
unlimited members.
9. At least two adults who act as a director are required at the time of
incorporation of a private limited company. As against, a minimum
of three directors is required in the case of a public limited
company for its incorporation.
10. A private limited company can start its business just after
receiving the certificate of incorporation, whereas a public
company needs a certificate of commencement of business after it
has received a certificate of incorporation, to commence business.
11. In a private limited company, two or more directors can be
appointed by a single resolution, which is not in the case of a
public limited company.
12. In the case of a private company, directors need not require
to file their consent to act as a director. On the other side, in the
case of a public company, directors must file their consent with the
registrar to act as a director within 30 days of their appointment as
a director.
13. 2/3rd of the total number of directors of a public limited
company must retire by rotation. Conversely, the directors of a
private company are not required to retire by rotation, they can be
permanent.
14. In the case of a private company, 2 members who are
present physically at the general meeting, constitute a quorum,
irrespective of the number of members. On the other hand, in the
case of a public company, to form a quorum:

 5 members are required to present in person when the

number of members as on the date of the meeting is 1000 or
less
 15 members are required to present in person when the
number of members as on the date of the meeting is more
than 1000 but less than 5000
 30 members are required to present in person when the
number of members as on the date of the meeting is more
than 5000.
15. Talking about the place of holding Annual General Meeting
(AGM), in case of a private company AGM can be held anywhere,
whereas in the case of a public company AGM can be held at the
registered office of the company or any other place within the city,
village or town where the registered office is situated.

16. While a private company is not required to organize a

statutory meeting, a public must organize a statutory meeting and
 deliver the report of such meetings to the shareholders and file the
same with Registrar.
17. Private Limited Company has greater operational flexibility,
as compared to Public Limited Company in carrying out affairs of
the company. There are a number of requirements and restrictions
from which a private company is exempted that apply to a public
company.