I want to know that is there a difference between private limited company and a limited company.
if yes then what kind of difference is there
'Private company' means a company which, by its articles;
-
restricts the right to transfer its shares, if any;
-
limits the number of its members to fifty not including
'Public company' means a company which is not a private company.
Key points of difference between a private limited and a public limited company are:
-
A public limited company is a company listed on a recognized stock exchange and the stocks are traded publicly. On the other hand, a private limited company is neither listed on the stock exchange nor are they traded. It is privately held by its members only.
-
The minimum number of members required to start a public company is seven. As against this, the private limited can be started with a minimum of two members.
-
In case of a public company, it is compulsory to call a statutory general meeting of members. There is no such compulsion in case of a private company.
-
The issue of prospectus or statement is mandatory in case of public company. However, this is not the case of a private company.
-
The public company will require a certificate of commencement post incorporation to begin its operation. In contrast to this, a private company can start its business right after its incorporation.
-
The transferability of shares is restricted completely in private limited company. While the shareholders of a public company can transfer their shares freely.
-
Since there is a limited number of people and fewer restrictions, the scope of a private limited company is limited. In contrary, the scope of a public company is vast. This is because the owners of the company can raise capital from the general public and have to abide by may legal restrictions.
-
There is a greater regulatory burden on a public limited company. This is because a great amount of information has to be made available to the public who are shareholders or prospective shareholders. A lot of money has to be invested in order to prepare reports and disclosures that match with the regulations provided by SEBI.
-
A signed written resolution is received by holding general meetings of a private limited company.
-
While it mandatory for public companies to appoint a company secretary, private companies may choose to do so only at their will.
CAclubindia
