Major Difference Between Limited Company and Private Limited Company

In general, the company means an association of people who carry a business. In the terms of the Companies Act, 2013 a "company means a company formed and registered under the Companies Act 1956 and 2013". We have seen many times that there is public limited or private limited written in last of the company’s name. For example Google India Pvt Ltd, Indian oil corporation ltd. The Last word of Company’s name differentiates that whether it is a Public Limited Company or Private Limited Company. We have to understand first that what is a Private Limited Company and what is a Public Limited Company.

PUBLIC LIMITED COMPANY

• Public Limited Company is the Company which is owned and traded publicly.
• Public Limited Company is the Company which has no limit on minimum paid-up Capital. Earlier it was 5 Lakh rupees minimum required.
• Minimum 7 persons required for incorporation.
• An unlimited member can be extended.
• There will be minimum 3 directors required for Public Limited Company.
• In the name of the company, the last word must be ‘limited company’
• Public Subscription is allowed.

PRIVATE LIMITED COMPANY

• Private Limited Company is Company which is owned and traded privately.
• a href="https://www.myonlineca.in/private-limited-company-registration.html">Private Limited Company Registration

is the Company which can be formed by 2 or more person. A maximum member can be extended to 200.

• Member and shareholder have limited liability.
• There will be a minimum 2 directors requires.
• It has no limit on minimum paid-up Capital. Earlier it was 1 lakh Rupees.
• In the name of the company, the last word must be ‘Private limited company’.
• The company exists in the eyes of law even in the case of insolvency and bankruptcy of its members.
• Shares can be sold to the people by the choice of the owner.
• The public is not invited to subscribe to the shares of the company.

So as the above mentioned there are two types of Company Public Limited Company and Private Limited Company. There are differences between these two companies. Differences mentioned below.

DIFFERENCE BETWEEN PUBLIC AND PRIVATE LIMITED COMPANY

Point of Difference

PUBLIC LIMITED COMPANY

PRIVATE LIMITED COMPANY

Formation of company

Seven or more persons required when the company to be formed

TWO or more person required

Use the word

The last word must be ‘limited’ in the company name

The last word must be ‘Private limited’ in the company name

Director

Minimum 3 directors required

Minimum 2 director required

Maximum member

UNLIMITED

200

AGM

REQUIRED

NOT REQUIRED

Minimum Paid up capital

NO minimum Limit

No minimum limit

Invitation for subscription of shares

Can Invite Public to subscribe shares and debentures

Cannot Invite Public

Issue of Prospectus

Required

Not required

Certificate to commence business

Required after Incorporation

Not Required

Fees of Director

Director should not get more than 11.5 % of Profit

NO LIMIT

As we can see in the above-mentioned table there is so many difference between Private Limited Company and Public Limited Company.

CONCLUSION for Difference between Ltd and Pvt Ltd

This table shows the basic difference between a private limited and a public limited company. While forming a company one has to decide whether they require to incorporate a private limited company or public limited company. while incorporating a company Registration fees you have to keep in mind the restrictions and requirements of both companies like Private Limited Company requires a minimum 2 directors whereas Public Limited Company requires a minimum of 3 directors. So these difference gives you a clear view in respect to which company you have to incorporate.

This is Anurag Jain, CMO at MyOnlineCA ( India's leading Online Legal Service Provider Company deals in Company and Tax Registration across India.