The difference between Private Ltd. And Public Ltd. company
Initially, we should differentiate between the concept of a private company and a public company.
A private company can be formed by 1, 2 or more people and owned and traded privately, whereas the public company needs a minimum of 7 individuals to be formed and it’s owned and traded publicly.
We have two types of companies, the first is Public Ltd. Company and the second Private Ltd company. Public Ltd. Company is a joint stock company formed and legally registered, started voluntarily by a group of people having a minimum paid up capital of $789.985.
Whereas, a Private Ltd. Company is a joint stock that is formed into a legal corporation. The maximum number of members in it is 50, started voluntarily by a group of people having a minimum paid up capital of $1557.997. It restricts the transfer of shares and debentures and notes the term ‘private limited’ at the end of its name.
The main differences between Public Ltd. Companies and Private Ltd. Companies are:
1. The public company is an entity that functions totally in public, exposed to the public bar, listed on a recognized stock exchange and traded publicly, whereas the private Ltd. company isn’t listed on a stock exchange and is held privately by members.
2. The number of members in a public company is not limited, however the maximum number of a private company is limited to 200 people, subject to certain conditions.
3. A public company should have up to 3 directors, whereas a private company is bound to have a minimum of 2 directors.
4. At the Annual General Meeting (AGM) in a public Ltd. Meeting, 5 members should make an appearance but in a private Ltd. Only 2 members should be present.
5. To initiate business, a public Ltd. Company is in need for a certificate of commencement of business after its incorporation, on the other hand a private Ltd. Company can start business right after its incorporation.
6. The transferability in a public Ltd. Is totally denied, however in a private Ltd. There is a free transfer of shares, it’s a free system.
7. Finally, a public Ltd. Has the right to invite the general public for subscribing shares of the company, whereas the private Ltd. Company hasn’t got the right to invite the public for subscription.
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