Difference between private limited company and public limited company

Posted By: Sm Adminon: October 30, 2015In: Miscellaneous

Private limited company:
Private limited company is the company which offers the limited liability and has some legal restrictions on its ownership. The shares which are owned by the members are called shareholders. The minimum number of shareholders is 2 and the maximum number of shareholders is 50. There is complete restriction in transferability of shares. The company must use the word Pvt. Ltd. at the end of its name
Public limited company:
A public limited company is a company which offers the shares to the general public and also has the liability limited. The minimum number of shareholder is 7 and no maximum in limit. There is no restriction in the transfer of shares. Public limited company can raise the funds from the public. The public limited company must use the word Ltd. at the end of its name.
Differences:

Basis	Private limited company	Public limited company
Definition (www.businessdictionary.com)	A type of company that offers limited liability or legal protection for its shareholders but that places certain restrictions on its ownership. These restrictions are defined in the company’s bylaws or regulations and are meant to prevent any hostile takeover attempt.	A company whose securities are traded on a stock exchange and can be bought and sold by anyone. Public companies are strictly regulated, and are required by law to publish their complete and true financial position so that investors can determine the true worth of its stock (shares). Also called publicly held company. Public limited company and its abbreviation Plc are commonly used in the UK in the way that corporation and Inc. is used in the United States.
Objectives/Purpose	Its objectives are: Optimizing profits Reporting financial data with clarity Limit liability Protect company’s policies Choosing the correct organizational structure	Its objectives are: expansion liquidity survival market share limited liability
Synonyms	Limited company, close corporation, privately held corporation	Private sector, enterprise, stock corporation, multinational
Transferability of shares	There is complete restriction on the transferability of shares.	There is no restriction on the transferability of the shares of a public company.
Types	The types of private limited company are listed below: Company limited by shares Company limited by guarantee Unlimited companies
Valuation of the company	It is more challenging.	It is less challenging.
Legal requirements	It is less strict for a private limited company.	It is strict for a public limited company.
Share types	Its types are: Equity share Preference share Equity share with differential voting right Debentures Sweat equity ESOPs Warrants	Its types are: Bearer shares Cumulative preference Ordinary Preference Redeemable
Pronunciation	Eng (UK): /ˈprʌɪvət/ /ˈlɪmɪtɪd/ /ˈkʌmp(ə)ni/ Eng (US): /ˈprīvit/ /ˈlimədəd/ ˈkəmp(ə)nē/	Eng (UK): /ˈpʌblɪk/ /ˈlɪmɪtɪd/ /ˈkʌmp(ə)ni/ Eng (US): /ˈpəblik/ /ˈlimədəd/ /ˈkəmp(ə)nē/
Advantages/Benefits	Its advantages are: Separate legal entity Limited liability Raise capital Perpetual existence Scope of expansion Secrecy Tax advantages	Its advantages are: Raise large capital Separate legal entity Perpetual existence Limited liability Transferability of shares
Disadvantages	Its disadvantages are: Limited scope of expansion Restriction in the transferability of shares	Its disadvantages are: More legal formalities Strict rules and regulations Loss of control Problem in management Lack of secrecy
Example in Sentence	There should be maximum two members in order to establish a private limited company. A private limited company can commence its business after receiving the Certificate of incorporation.	Some public limited companies can be small as well. They have turned their company to a public limited company from private limited company.