Public Vs Private Company
What is the Difference Between Public and Private companies in India?
The short answer is very little, but there are some crucial legal differences between them. Private Limited is registered and carried on by many or jointly by the members of the company. while on the other hand, A Public Limited Company under Company Act 2013 is an organization that has restricted risk and offers to the overall population. Its stock can be procured by anybody, either secretly through (IPO) the first sale of stock, or by means of exchanges on the financial exchange.
Difference between a private limited company and a public limited company. Learn how to start a company, the types of companies, advantages, and disadvantages of limited companies.
The below table illustrates more differences Between Public and Private companies in India
Particulars | Public limited company | Private Limited Company |
|---|---|---|
Section | 2(71) of Companies Act, 2013 | 2(68) of Companies Act, 2013 |
Definition | A public company is a company
Provided that a company which is a subsidiary of a company, not being a private company, shall be deemed to be a public company for the purposes of this Act even where such subsidiary company continues to be a private company in its articles ; | A company having a minimum paid-up share capital as may be prescribed, and which by its articles, -
|
Applicable law | Companies Act, 2013 | Companies Act, 2013 |
Liability | Limited or Unlimited | Limited or Unlimited |
Number of Members | Minimum 7 and Maximum unlimited members | Minimum of 2 and Maximum of 200 |
Directors | Minimum 3 Maximum 15 | Minimum 2 Maximum 15 |
Statutory Audit | Mandatory | Mandatory |
Board meeting | First Board Meeting should be held within 30 days of incorporation thereafter Minimum 4 board meetings every year The maximum gap between two board meetings should not be more than 120 days | First Board Meeting should be held within 30 days of incorporation thereafter Minimum 4 board meetings every year The maximum gap between two board meetings should not be more than 120 days |
Nominee | No Concept Of Nominee in Public Company | No Concept Of Nominee in Private Company Though a nominee can be appointed in OPC which is also a type of private company |
Minimum share capital | No requirement for minimum share capital. | No requirement for minimum share capital. |
Filing of Annual Returns | Financial Statements and Annual Returns have to be filed with the register | Financial Statements and Annual Returns have to be filed with the register |
Suffix of the company | Should end with public limited or Limited | Should end with Pvt. Ltd. |
Taxability | Flat rate of 30% | Flat rate of 26% |
Annual compliance | The annual compliance will include filing forms with the Ministry of Corporate Affairs for each financial year. | The annual compliance will include filing forms with the Ministry of Corporate Affairs for each financial year. |
Investment by Foreign National | NRIs, foreign nationals, and bodies are allowed to hold shares governed by FDI guidelines through an automatic route. | NRIs, foreign nationals, and bodies are allowed to hold shares governed by FDI guidelines through an automatic route. |
Raising of funds | Can raise funds from the public by issuing a prospectus | Cannot raise funds from the public Raising of funds is allowed through various ways including issues of equity, right issues, venture capital, and internal funding. |
Business activities | Any business | Any business. Except for those where private investment is not allowed |
Conversion | Can be converted into a private company voluntarily | Can be converted into a public company voluntarily |
Control and ownership | Owned and controlled completely by members and managed by directors. | Owned and controlled completely by members and managed by directors. |
Transferability | Easily transferable | Transfer of shares is restricted |
