Difference Between Private Limited and Public Limited Company

General

Aspect	Private Limited Company	Public Limited Company
Ownership Structure	Owned by a small group of shareholders.	Owned by a large number of shareholders.
Number of Shareholders	Typically has a limited number of shareholders (often family members or a small group of investors).	Can have an unlimited number of shareholders, often traded on stock exchanges.
Minimum Capital Requirement	Generally, there is no minimum capital requirement.	May have a minimum capital requirement (varies by jurisdiction).
Transfer of Shares	Shares are not freely transferable; approval of existing shareholders is often required.	Shares are freely transferable, bought and sold on stock exchanges.
Disclosure Requirements	Less stringent disclosure requirements, with less public scrutiny.	More stringent disclosure requirements, with higher public scrutiny.
Listing on Stock Exchange	Cannot be listed on a stock exchange.	Can be listed on a stock exchange (e.g., NYSE, NASDAQ).
Access to Capital	Limited access to capital since shares cannot be publicly traded.	Easier access to capital through public offerings and trading on stock exchanges.
Management and Control	Typically managed by a closely-knit group of directors/shareholders.	May have a more dispersed ownership structure, with a board of directors representing shareholders.
Statutory Compliance	Less stringent statutory compliance requirements.	More stringent statutory compliance requirements, including regular reporting and audit obligations.
Name of the Company	Must end with "Private Limited" or "Pvt. Ltd."	Must end with "Public Limited" or "Ltd."
Transfer of Ownership	Transfer of ownership is often more complicated and may require shareholder agreements.	Transfer of ownership is easier through buying/selling of publicly traded shares.
Dividend Distribution	More flexibility in dividend distribution among shareholders.	Dividends are typically distributed proportionally to the number of shares held.

Please note that the specific regulations and requirements for private and public limited companies may vary by country, so it's essential to consult with legal and financial professionals when setting up or operating such entities.

India

Aspect	Private Limited Company	Public Limited Company
Minimum Number of Members (Shareholders)	Minimum 2 and maximum 200 members.	Minimum 7 (no maximum limit) members.
Minimum Number of Directors	Minimum 2 directors.	Minimum 3 directors.
Transferability of Shares	Shares cannot be freely transferred; consent of existing shareholders is often required.	Shares are freely transferable without consent requirements.
Share Capital	No minimum capital requirement.	Minimum capital requirement typically exists (e.g., INR 5 lakhs).
Initial Public Offering (IPO)	Cannot make a public offering of shares.	Can make an IPO to raise capital by offering shares to the public.
Listing on Stock Exchange	Cannot be listed on a stock exchange.	Can be listed on a recognized stock exchange (e.g., BSE, NSE).
Disclosure and Compliance Requirements	Less stringent disclosure and compliance requirements.	More stringent disclosure and compliance requirements, including regular financial reporting.
Shareholder Meetings	Private limited companies have fewer mandatory meetings.	Public limited companies are required to hold more shareholder meetings.
Name of the Company	Must end with "Private Limited" or "Pvt. Ltd."	Must end with "Limited" or "Ltd."
Shareholders' Rights	Shareholders have more control over the company's affairs.	Shareholders may have less direct influence due to the larger number of shareholders.
Inviting Public Deposits	Cannot invite public deposits.	May invite public deposits after complying with regulatory requirements.
Prospectus for Share Issue	Not required for private placements.	Required when making a public issue (IPO).

Please note that these are general guidelines, and specific rules and regulations may change over time in India. It's essential to consult with legal and financial professionals when establishing or managing either type of company in India to ensure compliance with the latest laws and regulations.

 

The distinction between private limited and public limited companies is crucial in the world of business and corporate governance. These two types of companies vary in terms of ownership structure, regulations, capital requirements, and their ability to raise funds from the public. In this comprehensive guide, we will delve deep into the differences between private limited and public limited companies, exploring various aspects, including their formation, ownership, governance, disclosure requirements, advantages, disadvantages, and more.

1. Definition and Formation:

Private Limited Company:

• A private limited company is a type of business entity that is privately owned and managed. It is formed and registered under the company law of a specific country, such as the Companies Act in India or the Companies Act in the United Kingdom.

• In most jurisdictions, a private limited company can be established with a minimum number of shareholders (often 2 to 7) and directors (usually 2).

• Private limited companies are often favored by small and medium-sized enterprises (SMEs) due to their flexibility and ease of formation.

Public Limited Company:

• A public limited company, on the other hand, is a corporate entity that can offer its shares to the public and is subject to stricter regulatory requirements compared to private limited companies.

• To form a public limited company, there are typically higher minimum capital requirements, and the company must have a minimum number of shareholders (often 7 in many jurisdictions).

• Public limited companies are commonly used by larger corporations seeking to raise substantial capital from a wide range of investors through the sale of shares on public stock exchanges.

2. Ownership and Shareholders:

Private Limited Company:

• In a private limited company, ownership is limited to a small group of individuals or entities, often family members, friends, or a few investors.

• The shares of a private limited company are not freely transferable, and there are usually restrictions on selling or transferring shares to external parties without the consent of existing shareholders or directors.

• Shareholders' information and ownership details are typically not publicly disclosed or easily accessible.

Public Limited Company:

• Public limited companies have a larger and more diverse ownership base. They can have numerous shareholders, including institutional investors, retail investors, and the general public.

• Shares of a public limited company are freely tradable on stock exchanges, allowing for easy buying and selling by investors.

• Public limited companies are required to disclose detailed information about their shareholders, including significant shareholders, to ensure transparency.

3. Capital Requirements:

Private Limited Company:

• Private limited companies often have lower minimum capital requirements compared to public limited companies. Some countries may not specify a minimum capital requirement for private limited companies.

• The capital for a private limited company is typically contributed by the founders, shareholders, or through loans and retained earnings.

Public Limited Company:

• Public limited companies generally have higher minimum capital requirements, which are mandated by regulatory authorities. These requirements are intended to provide financial stability and protection to investors.

• To go public and list their shares on stock exchanges, companies often need to meet substantial capital thresholds.

4. Fundraising and Capital Raising:

Private Limited Company:

• Private limited companies have limited options for raising capital compared to their public counterparts. They can raise funds through private investments, bank loans, or retained earnings.

• They cannot issue shares to the public and are typically restricted from soliciting investments from the general public.

Public Limited Company:

• Public limited companies have a broader range of options for raising capital. They can issue shares to the public through initial public offerings (IPOs) and subsequent secondary offerings.

• Being publicly traded allows them to access a larger pool of investors and raise substantial capital for expansion, research and development, and other business activities.

5. Regulatory Compliance:

Private Limited Company:

• Private limited companies are subject to fewer regulatory requirements compared to public limited companies. This includes less stringent financial reporting and disclosure obligations.

• They may have more flexibility in their operational decisions due to fewer regulatory restrictions.

Public Limited Company:

• Public limited companies face extensive regulatory scrutiny and are subject to strict compliance requirements, including regular financial reporting, disclosure of significant events, and adherence to corporate governance standards.

• The company's financial statements are typically audited by external auditors to ensure accuracy and transparency.

6. Corporate Governance:

Private Limited Company:

• Corporate governance in private limited companies can be relatively informal, with decisions often made by a small group of shareholders or directors.

• There may be fewer checks and balances in place to ensure transparency and accountability.

Public Limited Company:

• Public limited companies are generally required to adhere to more rigorous corporate governance standards. They often have a board of directors with a mix of independent and non-independent directors.

• Shareholder rights are protected through mechanisms like annual general meetings, proxy voting, and disclosure of executive compensation.

7. Transparency and Disclosure:

Private Limited Company:

• Private limited companies have less stringent disclosure requirements compared to public limited companies. They are not obligated to disclose financial and operational information to the same extent.

• The financial affairs and performance of a private limited company are usually kept private and not accessible to the public.

Public Limited Company:

• Public limited companies must maintain a high level of transparency. They are required to disclose detailed financial statements, annual reports, and other material information to shareholders and the public.

• This transparency is intended to provide investors with the necessary information to make informed investment decisions.

8. Transferability of Shares:

Private Limited Company:

• Shares in private limited companies are often subject to restrictions on transferability. Shareholders may need approval from existing shareholders or directors to sell or transfer their shares.

• The process of buying or selling shares in a private limited company can be more complex and time-consuming.

Public Limited Company:

• Shares in public limited companies are freely transferable on stock exchanges. Investors can easily buy or sell shares through brokerage accounts.

• This liquidity makes it more convenient for investors to enter or exit their investments in public limited companies.

9. Exit Strategy:

Private Limited Company:

• Exiting a private limited company can be challenging, as there may be limited opportunities to sell shares. Shareholders often rely on finding a willing buyer within their network.

• The process of exiting a private limited company is less standardized compared to public limited companies.

Public Limited Company:

• Public limited companies provide shareholders with a well-defined exit strategy. They can sell their shares on stock exchanges at prevailing market prices whenever they choose.

• This liquidity makes it easier for investors to enter and exit their positions in public limited companies.

10. Stock Exchange Listing:

Private Limited Company:

• Private limited companies are not listed on stock exchanges. Their shares are not traded publicly, and they do not have a stock symbol.

• Ownership and valuation of shares are typically determined through private negotiations among shareholders.

Public Limited Company:

• Public limited companies are listed on stock exchanges, and their shares are traded publicly. They have stock symbols, and their share prices are subject to market dynamics and investor sentiment.

• Being listed on a stock exchange provides access to a broader investor base and enhances the company's visibility.

11. Reporting and Compliance Costs:

Private Limited Company:

• Private limited companies generally incur lower reporting and compliance costs compared to public limited companies. They are not required to meet the extensive reporting and regulatory requirements of public companies.

• This cost advantage can be significant, especially for smaller businesses.

Public Limited Company:

• Public limited companies bear higher reporting and compliance costs due to the need to meet regulatory standards, engage auditors, and produce detailed financial reports.

• These costs can be substantial but are often considered a necessary aspect of being publicly traded.

12. Access to Resources:

Private Limited Company:

• Private limited companies may have limited access to external resources, such as capital and expertise, compared to public limited companies.

• They rely more on the resources of their founders, shareholders, and retained earnings.

Public Limited Company:

• Public limited companies have broader access to external resources. They can tap into the financial markets to raise capital, and their publicly traded status can attract top talent and partnerships.

• The ability to access a wide range of resources is a significant advantage for growth and expansion.

13. Investor Relations:

Private Limited Company:

• Investor relations in private limited companies are typically less formal and may involve communication with a small group of shareholders or investors.

• The level of engagement with investors is generally lower compared to public limited companies.

Public Limited Company:

• Public limited companies prioritize investor relations as a critical aspect of their operations. They have dedicated investor relations teams to communicate with shareholders, analysts, and the investing public.

• Regular communication with investors helps maintain investor confidence and can impact the company's stock price.

14. Stock Price Volatility:

Private Limited Company:

• Private limited companies do not have publicly traded shares, so they are not subject to the same level of stock price volatility as public limited companies.

• Valuation is often determined through private negotiations, which can result in less frequent price fluctuations.

Public Limited Company:

• Public limited companies are susceptible to stock price volatility, as their shares are traded on stock exchanges, where prices can fluctuate daily based on market forces, news, and investor sentiment.

• Share price movements can impact the perception of the company's financial health and performance.

15. Exit Strategies for Founders:

Private Limited Company:

• Founders of private limited companies may have limited exit options. They can sell their shares to existing shareholders or seek an external buyer.

• The process of finding a buyer and negotiating a sale can be challenging and time-consuming.

Public Limited Company:

• Founders of public limited companies have more exit options. They can sell their shares on the open market or conduct large-scale share offerings to institutional investors.

• Going public can provide founders with a well-defined exit strategy and liquidity event.

16. Risk of Hostile Takeovers:

Private Limited Company:

• Private limited companies are less vulnerable to hostile takeovers because share ownership is restricted and controlled by a small group of individuals.

• Shareholders often have preemptive rights, allowing them to purchase additional shares to prevent hostile takeovers.

Public Limited Company:

• Public limited companies are more susceptible to hostile takeovers due to their widely dispersed ownership. Hostile bidders can accumulate shares from the open market to gain control.

• Various anti-takeover mechanisms, such as poison pills and staggered boards, may be employed to deter hostile takeovers.

17. Disclosures and Financial Reporting:

Private Limited Company:

• Private limited companies have less stringent requirements for financial reporting and disclosures. They are not typically required to disclose as much information to the public.

• Detailed financial statements may only be available to a limited group of stakeholders.

Public Limited Company:

• Public limited companies are obligated to provide extensive financial disclosures, including quarterly and annual reports, to shareholders, regulatory authorities, and the public.

• The level of transparency in financial reporting is significantly higher for public limited companies.

18. Tax Implications:

Private Limited Company:

• Taxation for private limited companies varies by jurisdiction. In some countries, they may benefit from certain tax advantages, such as lower corporate tax rates or tax incentives for SMEs.

• The tax implications for private limited companies depend on their specific location and the industry they operate in.

Public Limited Company:

• Public limited companies are subject to corporate income tax rates applicable to their jurisdiction. They may not receive the same tax benefits or incentives as private limited companies.

• Tax planning and compliance for public limited companies involve navigating complex tax codes and regulations.

19. Disclosure of Financial Performance:

Private Limited Company:

• The financial performance of private limited companies is often known only to a select group of stakeholders, such as shareholders and lenders.

• Competitors and the general public have limited access to their financial data, providing a level of confidentiality.

Public Limited Company:

• Public limited companies are required to disclose detailed financial performance information to the public and regulatory authorities. This includes revenue, expenses, profits, and more.

• Competitors and analysts closely scrutinize their financial reports, which can impact stock prices and market perception.

20. Reporting Frequency:

Private Limited Company:

• Private limited companies typically report financial results on an annual basis, with periodic updates provided to shareholders as required.

• The reporting frequency is generally less frequent compared to public limited companies.

Public Limited Company:

• Public limited companies must report financial results quarterly, in addition to annual reports. These frequent updates allow investors to assess the company's performance and make informed decisions.

21. Governance Structure:

Private Limited Company:

• The governance structure of private limited companies is often simpler, with a smaller board of directors and fewer committees.

• Decision-making processes can be more agile due to the limited number of stakeholders.

Public Limited Company:

• Public limited companies have a more complex governance structure, with larger boards, diverse committees, and a higher degree of oversight.

• Governance practices are often designed to ensure transparency, accountability, and compliance with regulatory requirements.

22. Impact on Brand and Reputation:

Private Limited Company:

• Private limited companies may have a lower public profile and less visibility, which can impact their brand recognition and reputation.

• They may not benefit from the same level of public trust and credibility as publicly traded companies.

Public Limited Company:

• Public limited companies often enjoy greater brand visibility and recognition. Their status as publicly traded entities can enhance their reputation and credibility in the market.

• Being listed on stock exchanges can also attract media attention and investor interest.

23. Exit Strategies for Investors:

Private Limited Company:

• Investors in private limited companies may have limited exit options. They can sell their shares to existing shareholders or seek a buyer through private negotiations.

• The liquidity of shares in private limited companies is typically lower, making it harder for investors to exit their positions.

Public Limited Company:

• Investors in public limited companies have readily available exit options. They can sell their shares on stock exchanges at prevailing market prices.

• The liquidity of shares in public limited companies provides investors with flexibility and ease of exit.

24. Merger and Acquisition Activity:

Private Limited Company:

• Mergers and acquisitions involving private limited companies often involve negotiations with a limited group of stakeholders and may be less transparent.

• The process of acquiring or merging with a private limited company can be complex due to restricted share ownership.

Public Limited Company:

• Mergers and acquisitions involving public limited companies are subject to regulatory scrutiny and transparency requirements.

• The stock market often plays a significant role in determining the value and terms of such transactions.

25. Dividend Policy:

Private Limited Company:

• The dividend policy of private limited companies is typically determined by the shareholders and directors. They have more flexibility in deciding when and how much to distribute as dividends.

• Dividend payments may be less predictable in private limited companies.

Public Limited Company:

• Public limited companies often have more structured dividend policies. They are expected to regularly distribute dividends to shareholders based on their financial performance.

• Shareholders of public limited companies can have more predictable income from dividend payments.

26. Access to Debt Financing:

Private Limited Company:

• Private limited companies can access debt financing through bank loans, private lenders, and bond issuance if they meet the necessary credit criteria.

• The availability and terms of debt financing may vary based on the company's financial health and creditworthiness.

Public Limited Company:

• Public limited companies typically have easier access to debt financing due to their higher visibility, transparency, and larger asset base.

• They can issue bonds in the public debt markets and negotiate favorable terms with a broader range of lenders.

27. Exit Routes for Employees:

Private Limited Company:

• Employees of private limited companies may have limited exit options for their stock options or equity grants. Selling shares may require approval from existing shareholders or the company itself.

• The liquidity of employee stock options can be a challenge.

Public Limited Company:

• Employees of public limited companies often have more straightforward exit options for their stock options or equity grants. They can sell their shares on stock exchanges.

• The liquidity of employee stock options is typically higher, providing employees with greater flexibility.

28. Regulatory Authorities and Compliance:

Private Limited Company:

• Private limited companies are subject to the regulations and oversight of relevant government agencies, but their compliance requirements are generally less extensive than those of public limited companies.

• The regulatory burden is typically lighter for private limited companies.

Public Limited Company:

• Public limited companies face more extensive regulation and oversight by government authorities, stock exchanges, and securities commissions.

• Compliance with these regulations is a significant operational aspect for public limited companies.

29. Risk Management and Insurance:

Private Limited Company:

• Risk management and insurance practices in private limited companies may be less formal and comprehensive due to their smaller scale and lower visibility.

• They may have fewer resources allocated to risk management.

Public Limited Company:

• Public limited companies often have more robust risk management practices and insurance coverage due to their larger size and higher exposure to various risks.

• They may invest in comprehensive risk assessment and mitigation strategies.

30. Going Private:

Private Limited Company:

• Private limited companies can choose to remain private or, in some cases, go public through an IPO.

• The decision to go public involves assessing the benefits of increased access to capital against the costs and regulatory requirements.

Public Limited Company:

• Public limited companies have the option to go private through a process known as a "going-private transaction." This involves delisting from stock exchanges and repurchasing shares from public shareholders.

• Going private is a strategic decision often driven by the desire to reduce regulatory compliance costs and regain privacy.

31. Reporting of Insider Trading:

Private Limited Company:

• Insider trading regulations may apply to private limited companies, but the enforcement and reporting of insider trading activities are generally less stringent.

• The reporting of insider trading incidents may be less publicized.

Public Limited Company:

• Public limited companies are subject to strict insider trading regulations. They must report insider trading activities promptly and transparently to regulatory authorities.

• Insider trading incidents involving public limited companies often receive significant media attention.

32. Access to Research Analyst Coverage:

Private Limited Company:

• Private limited companies may have limited access to research analyst coverage and may not be followed by as many financial analysts compared to public limited companies.

• The availability of research reports and recommendations may be limited.

Public Limited Company:

• Public limited companies typically have access to a broader range of research analyst coverage. They are often followed by numerous financial analysts and research firms.

• Extensive analyst coverage can influence investor sentiment and stock performance.

33. Impact of Economic Downturns:

Private Limited Company:

• Private limited companies may have more flexibility in responding to economic downturns due to their smaller size and ownership structure.

• They may be better equipped to adapt quickly to changing market conditions.

Public Limited Company:

• Public limited companies can be more vulnerable to economic downturns due to their size and higher exposure to market dynamics. Stock prices may experience significant volatility during economic crises.

• The impact of economic downturns on public limited companies can be more pronounced.

34. Shareholder Activism:

Private Limited Company:

• Private limited companies are less susceptible to shareholder activism, as ownership is typically concentrated within a small group of shareholders who have more control over the company's decisions.

• Activist investors may find it challenging to accumulate a significant stake in a private limited company.

Public Limited Company:

• Public limited companies are more susceptible to shareholder activism. Activist investors can acquire shares in the open market and use their voting power to influence the company's strategies and policies.

• Shareholder activism is a well-documented phenomenon in public limited companies.

35. Initial Public Offering (IPO):

Private Limited Company:

• Private limited companies can choose to go public through an initial public offering (IPO) to raise capital and become publicly traded entities.

• The decision to conduct an IPO involves a comprehensive process of regulatory compliance and due diligence.

Public Limited Company:

• Public limited companies have already completed an IPO and are publicly traded. They can conduct secondary offerings to raise additional capital from the public markets.

36. Disclosure of Executive Compensation:

Private Limited Company:

• Private limited companies are generally not required to disclose executive compensation details to the public. This information remains confidential and is known only to a select group of stakeholders.

• The level of transparency regarding executive compensation may be lower.

Public Limited Company:

• Public limited companies are obligated to disclose executive compensation, including salaries, bonuses, stock options, and other perks, in their annual reports and proxy statements.

• The transparency of executive compensation is intended to align the interests of executives with those of shareholders.

37. Market Valuation:

Private Limited Company:

• The valuation of private limited companies is often determined through negotiations among shareholders, using methods such as discounted cash flow (DCF) analysis or comparable company analysis.

• Valuation can be subjective and may vary based on the perspectives of buyers and sellers.

Public Limited Company:

• Public limited companies have a transparent market valuation determined by their stock prices on stock exchanges. Valuation is based on supply and demand dynamics in the open market.

• Market valuation provides a clear indication of the company's worth at any given time.

38. Shareholder Meetings:

Private Limited Company:

• Private limited companies may hold shareholder meetings, but they are often less formal and attended by a limited number of shareholders.

• The decision-making process may be less structured, with fewer voting procedures.

Public Limited Company:

• Public limited companies are required to hold annual general meetings (AGMs) and special meetings with well-defined voting procedures and disclosure requirements.

• Shareholder meetings are essential for corporate governance and decision-making.

39. Access to Strategic Partnerships:

Private Limited Company:

• Private limited companies may have limited access to strategic partnerships with larger corporations, as they may be viewed as smaller and less established entities.

• Building strategic partnerships can be more challenging for private limited companies.

Public Limited Company:

• Public limited companies often have greater opportunities to establish strategic partnerships with industry giants and other organizations. Their publicly traded status can enhance their credibility.

• Access to strategic partnerships can provide public limited companies with growth opportunities and resources.

40. Exposure to Litigation and Legal Challenges:

Private Limited Company:

• Private limited companies may face legal challenges, but their lower public profile and smaller scale can make them less visible targets for litigation.

• Legal disputes may be resolved more discreetly.

Public Limited Company:

• Public limited companies are more exposed to litigation and legal challenges due to their higher visibility and larger number of stakeholders. Shareholder lawsuits and regulatory investigations are relatively common.

• Legal disputes involving public limited companies often receive significant media attention.

41. Board Composition:

Private Limited Company:

• The board of directors in private limited companies may be smaller and composed primarily of founders and major shareholders.

• The composition may lack independent directors.

Public Limited Company:

• Public limited companies typically have larger boards with a mix of independent and non-independent directors. Independent directors are intended to provide unbiased oversight.

• Corporate governance standards often require a certain percentage of independent directors on the board.

42. Exit of Founders and Key Personnel:

Private Limited Company:

• The exit of founders and key personnel in private limited companies can have a significant impact on the company's operations and stability.

• Succession planning may be a critical consideration for the continuity of the business.

Public Limited Company:

• Public limited companies often have more structured succession planning and contingency measures in place to address the exit of key individuals.

• The transition of leadership is a well-defined process.

43. Perceptions of Stability:

Private Limited Company:

• Private limited companies may be perceived as more stable and less susceptible to external pressures due to their ownership structure and confidentiality.

• They may be seen as less affected by market sentiment.

Public Limited Company:

• Public limited companies can be perceived as subject to higher volatility and external pressures due to their publicly traded status and exposure to market forces.

• Market sentiment can have a pronounced impact on their stock prices and perceived stability.

44. Public Relations and Media Scrutiny:

Private Limited Company:

• Private limited companies often have less extensive public relations efforts and are subject to lower media scrutiny.

• Media coverage may be less frequent and impactful.

Public Limited Company:

• Public limited companies typically invest more in public relations and are subject to higher media scrutiny. Their actions and decisions are closely monitored by journalists and analysts.

• Media coverage can significantly influence public perception and stock performance.

45. Impact of Shareholder Activism:

Private Limited Company:

• Shareholder activism in private limited companies may have a limited impact, as activists may face challenges accumulating a significant stake and influencing decision-making.

• The effects of shareholder activism may be less pronounced.

Public Limited Company:

• Public limited companies are more susceptible to shareholder activism. Activist investors can acquire shares in the open market and use their voting power to push for changes in strategy or governance.

• Shareholder activism can have a substantial impact on public limited companies' operations and decision-making.

46. Ability to Attract Talent:

Private Limited Company:

• Private limited companies may face challenges in attracting top talent, especially if they are not well-known or offer limited equity participation opportunities.

• Talent recruitment may require competitive compensation packages.

Public Limited Company:

• Public limited companies often have an advantage in attracting talent due to their higher visibility, stock-based incentives, and potential for equity participation.

• Top talent may be drawn to the prestige and growth opportunities offered by publicly traded companies.

47. Exit Strategies for Investors:

Private Limited Company:

• Investors in private limited companies may have limited exit options. They can sell their shares to existing shareholders or seek an external buyer through private negotiations.

• The liquidity of shares in private limited companies is typically lower, making it harder for investors to exit their positions.

Public Limited Company:

• Investors in public limited companies have readily available exit options. They can sell their shares on stock exchanges at prevailing market prices.

• The liquidity of shares in public limited companies provides investors with flexibility and ease of exit.

48. Access to Capital Markets:

Private Limited Company:

• Private limited companies do not have direct access to capital markets for fundraising. They rely on private investments, loans, or retained earnings.

• Access to external capital can be more limited.

Public Limited Company:

• Public limited companies have direct access to capital markets through the issuance of shares and bonds. They can raise substantial capital from a wide range of investors.

• The ability to access capital markets is a significant advantage for public limited companies.

49. Minority Shareholder Rights:

Private Limited Company:

• Minority shareholders in private limited companies may have limited rights and influence, as control is often concentrated in the hands of a small group of majority shareholders.

• Minority shareholders may not have significant say in company decisions.

Public Limited Company:

• Minority shareholders in public limited companies have legal rights and protections, including voting rights and the ability to participate in major decisions through shareholder meetings.

• Corporate governance standards often prioritize the rights of minority shareholders.

50. Transfer of Ownership:

Private Limited Company:

• The transfer of ownership in private limited companies can be complex and subject to restrictions, as existing shareholders may have the right of first refusal or other approval requirements.

• The process of transferring ownership may involve negotiations and legal agreements.

Public Limited Company:

• The transfer of ownership in public limited companies is relatively straightforward. Shares can be bought and sold on stock exchanges through brokerage accounts.

• The liquidity of shares allows for easy transfer of ownership.

51. Liquidity of Shares:

Private Limited Company:

• Shares in private limited companies are often less liquid, meaning they are not easily bought or sold, and the process may require time and effort.

• Liquidity constraints can impact the ability to exit investments.

Public Limited Company:

• Shares in public limited companies are highly liquid, as they can be readily bought or sold on stock exchanges during trading hours.

• Liquidity makes it easier for investors to enter or exit their positions.

52. Investor Relations:

Private Limited Company:

• Investor relations in private limited companies are typically less formal and may involve communication with a small group of shareholders or investors.

• The level of engagement with investors is generally lower compared to public limited companies.

Public Limited Company:

• Public limited companies prioritize investor relations as a critical aspect of their operations. They have dedicated investor relations teams to communicate with shareholders, analysts, and the investing public.

• Regular communication with investors helps maintain investor confidence and can impact the company's stock price.

53. Impact of Stock Price on Employee Compensation:

Private Limited Company:

• In private limited companies, stock options and equity-based compensation may be less directly tied to stock performance, as there is no publicly traded stock price.

• The valuation of equity grants may be based on internal metrics or negotiations.

Public Limited Company:

• In public limited companies, stock-based compensation is often closely tied to stock performance, and employees may receive equity grants with exercise prices based on the prevailing market price.

• Employee compensation can be significantly impacted by fluctuations in the company's stock price.

54. Ability to Access Capital Markets:

Private Limited Company:

• Private limited companies do not have direct access to capital markets for fundraising. They rely on private investments, loans, or retained earnings.

• Access to external capital can be more limited.

Public Limited Company:

• Public limited companies have direct access to capital markets through the issuance of shares and bonds. They can raise substantial capital from a wide range of investors.

• The ability to access capital markets is a significant advantage for public limited companies.

55. Shareholder Demands and Activism:

Private Limited Company:

• Shareholder demands and activism in private limited companies may be less common, as ownership is concentrated within a small group, and decision-making may be more centralized.

• Shareholder disputes and activism may be resolved privately.

Public Limited Company:

• Public limited companies are more exposed to shareholder demands and activism due to their larger and more diverse shareholder base. Activist investors can accumulate shares and exert pressure for changes.

• Shareholder activism can lead to public battles and disputes.

56. Insider Trading Restrictions:

Private Limited Company:

• Insider trading regulations may apply to private limited companies, but the enforcement and reporting of insider trading activities are generally less stringent.

• The reporting of insider trading incidents may be less publicized.

Public Limited Company:

• Public limited companies are subject to strict insider trading regulations. They must report insider trading activities promptly and transparently to regulatory authorities.

• Insider trading incidents involving public limited companies often receive significant media attention.

57. Long-Term Strategic Planning:

Private Limited Company:

• Private limited companies may have greater flexibility in long-term strategic planning, as they are not subject to the same quarterly reporting and market pressures as public limited companies.

• They can focus on longer-term objectives without the need for immediate results.

Public Limited Company:

• Public limited companies often face pressure to meet short-term financial targets and satisfy investor expectations. Long-term planning is influenced by quarterly reporting cycles and market demands.

• Balancing long-term and short-term goals can be a challenge for public limited companies.

58. Regulatory Reporting and Compliance:

Private Limited Company:

• Regulatory reporting and compliance requirements for private limited companies are generally less extensive and less frequent than those for public limited companies.

• The reporting burden is typically lower for private limited companies.

Public Limited Company:

• Public limited companies are subject to more extensive and frequent regulatory reporting and compliance requirements. They must meet quarterly and annual reporting deadlines and disclose material events promptly.

• Compliance with these regulations is a significant operational aspect for public limited companies.

59. Availability of Public Funds:

Private Limited Company:

• Private limited companies do not have access to public funds or government grants, as they are privately owned and not publicly funded.

• They rely on private capital and financing sources.

Public Limited Company:

• Public limited companies may have access to public funds, government grants, or subsidies in certain industries or regions. Public funding can support research, development, and expansion efforts.

• Access to public funds can provide a financial advantage.

60. Governance Transparency:

Private Limited Company:

• Governance practices in private limited companies may be less transparent, with fewer disclosures and public oversight.

• Governance decisions may be made more informally.

Public Limited Company:

• Public limited companies are required to adhere to higher levels of governance transparency. They must disclose board composition, executive compensation, and other governance-related information to the public.

• Transparency is essential to building investor trust and confidence.

61. Impact of Stock Price on Executive Compensation:

Private Limited Company:

• In private limited companies, executive compensation may be less directly tied to stock performance, as there is no publicly traded stock price.

• Compensation packages for executives may be structured differently, focusing on other performance metrics.

Public Limited Company:

• In public limited companies, executive compensation is often closely tied to stock performance, and executives may receive significant equity-based compensation tied to stock price targets.

• Fluctuations in the company's stock price can have a substantial impact on executive compensation.

62. Minority Shareholder Protections:

Private Limited Company:

• Minority shareholders in private limited companies may have limited legal protections and may be at the mercy of majority shareholders for decision-making.

• Their ability to influence company decisions may be limited.

Public Limited Company:

• Minority shareholders in public limited companies typically have legal protections and rights, including voting rights and disclosure requirements, to ensure fair treatment.

• Corporate governance standards prioritize the protection of minority shareholder interests.

63. Corporate Social Responsibility (CSR) Reporting:

Private Limited Company:

• CSR reporting in private limited companies is generally voluntary and may be less comprehensive compared to public limited companies.

• CSR initiatives and reporting may be driven more by internal values and stakeholder relationships.

Public Limited Company:

• Public limited companies often have mandatory CSR reporting requirements and are subject to greater scrutiny regarding their social and environmental responsibility efforts.

• CSR reporting is an integral part of their corporate identity and reputation management.

64. Access to Intellectual Property:

Private Limited Company:

• Private limited companies may face challenges in accessing valuable intellectual property or technology licenses from external parties, especially if they are not well-known or well-funded.

• Negotiating access to intellectual property may be more challenging.

Public Limited Company:

• Public limited companies often have an advantage in negotiating access to intellectual property, as they may be perceived as more stable and credible partners.

• Their publicly traded status can enhance their ability to secure valuable intellectual property agreements.

65. Corporate Culture and Values:

Private Limited Company:

• Corporate culture and values in private limited companies can be more influenced by the founders and major shareholders, as they often have significant control over decision-making.

• Cultural alignment may be more closely tied to the preferences of key stakeholders.

Public Limited Company:

• Corporate culture and values in public limited companies may be shaped by a broader range of stakeholders, including shareholders, employees, and the board of directors.

• Publicly traded companies may place a higher emphasis on alignment with societal values and expectations.

66. Ability to Withstand Market Volatility:

Private Limited Company:

• Private limited companies may have a higher degree of resilience to market volatility due to their smaller size and lower exposure to public sentiment.

• They may be better able to weather economic downturns without significant stock price fluctuations.

Public Limited Company:

• Public limited companies can be more vulnerable to market volatility due to their larger size and higher visibility. Stock prices may experience significant fluctuations during market downturns.

• Their susceptibility to market sentiment can impact their stability.

67. Access to Research and Development Funding:

Private Limited Company:

• Private limited companies may have limited access to external research and development (R&D) funding sources, relying more on internal resources for innovation.

• Securing R&D funding may require alternative financing methods.

Public Limited Company:

• Public limited companies often have better access to external R&D funding through public markets, government grants, and partnerships with research institutions.

• Access to external funding can accelerate innovation and product development.

68. Public Perception of Innovation:

Private Limited Company:

• Public perception of innovation in private limited companies may be driven by the company's reputation, product quality, and internal initiatives.

• Innovation may be perceived as more intrinsic to the company's culture.

Public Limited Company:

• Public perception of innovation in public limited companies can be influenced by market sentiment, stock performance, and external factors.

• Stock price fluctuations can impact the perception of the company's innovation capabilities.

69. Ability to Attract Institutional Investors:

Private Limited Company:

• Private limited companies may face challenges in attracting institutional investors, as they often prefer publicly traded stocks with higher liquidity.

• The investor base may be more skewed toward individual investors.

Public Limited Company:

• Public limited companies are more attractive to institutional investors, such as mutual funds and pension funds, due to their publicly traded status and liquidity.

• Institutional investors often play a significant role in the ownership and trading of shares.

70. Impact of Market Sentiment on Share Price:

Private Limited Company:

• Market sentiment may have a limited impact on the share price of private limited companies, as their shares are not publicly traded.

• Valuation is often based on internal factors rather than market sentiment.

Public Limited Company:

• Market sentiment can have a significant impact on the share price of public limited companies. Stock prices are influenced by investor perceptions, news, and external factors.

• The company's stock performance can be highly sensitive to market sentiment.

71. Access to Government Contracts:

Private Limited Company:

• Private limited companies may have limited access to government contracts and procurement opportunities, as these contracts often require a competitive bidding process.

• Access to government contracts can be challenging for private companies.

Public Limited Company:

• Public limited companies may have an advantage in accessing government contracts, as they may be perceived as more stable and accountable partners.

• Their publicly traded status can enhance their credibility in government procurement processes.

72. Impact of Economic Stimulus Programs:

Private Limited Company:

• Private limited companies may have limited access to economic stimulus programs and government grants, as these programs often prioritize publicly traded companies or specific industries.

• Access to economic stimulus may be more restricted.

Public Limited Company:

• Public limited companies may have better access to economic stimulus programs and government grants, as they are publicly traded and subject to greater public and regulatory scrutiny.

• Government support programs may be more accessible to publicly traded companies.

73. Access to Investment Banking Services:

Private Limited Company:

• Private limited companies may have limited access to investment banking services, such as underwriting and financial advisory, which are often more readily available to publicly traded companies.

• Raising capital through investment banking may be more challenging for private companies.

Public Limited Company:

• Public limited companies have greater access to investment banking services, as they can engage investment banks for services related to public offerings, mergers and acquisitions, and financial strategy.

• Investment banks often play a significant role in the capital-raising activities of publicly traded companies.

74. Ability to Use Stock as Currency:

Private Limited Company:

• Private limited companies cannot use their stock as currency for acquisitions or strategic partnerships, as their shares are not publicly traded.

• They may need to rely on cash or other assets for such transactions.

Public Limited Company:

• Public limited companies can use their stock as currency for acquisitions, partnerships, and strategic transactions, offering shares as consideration to other parties.

• The ability to use stock as currency provides flexibility in deal-making.

75. Access to Large-Scale Financing:

Private Limited Company:

• Private limited companies may face challenges in accessing large-scale financing for major projects or expansion due to their limited ability to issue bonds or publicly traded shares.

• Financing large-scale initiatives may require creative funding solutions.

Public Limited Company:

• Public limited companies have greater access to large-scale financing through the issuance of bonds and the sale of additional shares to institutional investors and the public.

• They can tap into capital markets for substantial funding needs.

76. Business Continuity Planning:

Private Limited Company:

• Business continuity planning in private limited companies may be more focused on internal risks and contingencies, with less emphasis on external market factors.

• The scope of planning may be more tailored to the specific business operations.

Public Limited Company:

• Business continuity planning in public limited companies often includes considerations for external market risks, stock price volatility, and investor sentiment.

• Planning may need to address a broader range of potential disruptions.

77. Impact of Economic and Social Trends:

Private Limited Company:

• Private limited companies may have more flexibility in responding to economic and social trends, as they are not subject to the same market pressures and expectations as public limited companies.

• They can adapt their strategies at their own pace.

Public Limited Company:

• Public limited companies must navigate economic and social trends while meeting market expectations and investor demands. They may need to respond more quickly to changes in consumer preferences and societal values.

• Market sentiment can be influenced by a company's responsiveness to trends.

78. Access to Investment Analysts:

Private Limited Company:

• Private limited companies may have limited access to investment analysts and may not be followed by as many financial analysts compared to public limited companies.

• The availability of research reports and recommendations may be limited.

Public Limited Company:

• Public limited companies typically have access to a broader range of investment analysts. They are often followed by numerous financial analysts and research firms.

• Extensive analyst coverage can influence investor sentiment and stock performance.

79. Impact of Share Price on Employee Stock Plans:

Private Limited Company:

• In private limited companies, the impact of share price fluctuations on employee stock plans may be less significant, as stock options and equity grants are not tied to a publicly traded market price.

• Employee compensation may be influenced by other factors.

Public Limited Company:

• In public limited companies, share price fluctuations can have a direct impact on the value of employee stock options and equity grants. Employees may closely monitor stock performance.

• Stock price movements can affect the perceived value of employee compensation.

80. Access to Industry Partnerships:

Private Limited Company:

• Private limited companies may face challenges in accessing industry partnerships and collaborations with larger corporations, as they may be viewed as smaller and less established entities.

• Building industry partnerships can be more challenging for private companies.

Public Limited Company:

• Public limited companies often have an advantage in establishing industry partnerships, as they may be perceived as more stable and credible partners.

• Their publicly traded status can enhance their ability to secure valuable industry agreements.

81. Management Succession Planning:

Private Limited Company:

• Succession planning for management roles in private limited companies may be more informal and personalized, as the focus is on continuity and alignment with the founders' vision.

• The transition of leadership may be less structured.

Public Limited Company:

• Public limited companies often have more formal management succession planning processes in place, involving clear criteria, assessments, and a broader range of stakeholders.

• The transition of leadership is a well-defined and strategic process.

82. Ability to Withstand Shareholder Pressure:

Private Limited Company:

• Private limited companies may have more flexibility in withstanding shareholder pressure, as ownership is often concentrated among a small group of shareholders with aligned interests.

• They can make decisions that prioritize long-term goals over short-term shareholder demands.

Public Limited Company:

• Public limited companies may be more susceptible to shareholder pressure and activism, as they have a larger and more diverse shareholder base with varying interests.

• Balancing shareholder demands with long-term strategy can be challenging for public limited companies.

83. Impact of Economic Stimulus Programs:

Private Limited Company:

• Private limited companies may have limited access to economic stimulus programs and government grants, as these programs often prioritize publicly traded companies or specific industries.

• Access to economic stimulus may be more restricted.

Public Limited Company:

• Public limited companies may have better access to economic stimulus programs and government grants, as they are publicly traded and subject to greater public and regulatory scrutiny.

• Government support programs may be more accessible to publicly traded companies.

84. Ability to Engage in Stock Buybacks:

Private Limited Company:

• Private limited companies do not have the ability to engage in stock buybacks, as their shares are not publicly traded.

• They cannot repurchase their own shares from the open market.

Public Limited Company:

• Public limited companies can engage in stock buybacks (share repurchases) to reduce the number of outstanding shares and return capital to shareholders.

• Buybacks are a common financial strategy for publicly traded companies.

85. Impact of Quarterly Earnings Pressure:

Private Limited Company:

• Private limited companies are not subject to the same quarterly earnings pressure and expectations as public limited companies.

• They can focus on longer-term financial goals without the need to meet short-term targets.

Public Limited Company:

• Public limited companies must navigate the pressure to meet quarterly earnings expectations and satisfy investor demands for consistent financial performance.

• Balancing short-term and long-term goals is a key challenge for publicly traded companies.

86. Access to Venture Capital Funding:

Private Limited Company:

• Private limited companies may have access to venture capital funding if they meet the criteria and are of interest to venture capital firms.

• Venture capital can provide funding for growth and innovation.

Public Limited Company:

• Public limited companies are generally less reliant on venture capital funding, as they have access to a broader range of financing options through public markets.

• They may have already gone through the venture capital stage before going public.

87. Impact of Economic and Political Stability:

Private Limited Company:

• Private limited companies may be less affected by economic and political stability concerns, as they can focus on their specific business operations without the scrutiny faced by public limited companies.

• They can prioritize operational stability.

Public Limited Company:

• Public limited companies can be more sensitive to economic and political stability concerns, as their stock prices can be influenced by macroeconomic factors and government policies.

• They may need to manage investor perceptions related to stability.

88. Use of Equity as Compensation:

Private Limited Company:

• In private limited companies, equity-based compensation for employees and executives may be less common, as there is no publicly traded stock price to base awards on.

• Compensation packages may rely more on cash and other benefits.

Public Limited Company:

• In public limited companies, equity-based compensation is often a significant component of employee and executive compensation packages. Stock options and restricted stock units (RSUs) are commonly used.

• Equity awards are closely tied to the company's stock price.

89. Impact of Regulatory Changes:

Private Limited Company:

• Private limited companies may be less affected by regulatory changes, as they often have fewer compliance requirements compared to public limited companies.

• They may have more flexibility in adapting to regulatory shifts.

Public Limited Company:

• Public limited companies are more exposed to the impact of regulatory changes, as they must comply with a wide range of regulations, and changes can have significant operational and financial implications.

• Regulatory changes can affect stock prices and investor perceptions.

90. Ability to Influence Industry Standards:

Private Limited Company:

• Private limited companies may have limited influence over industry standards, as their size and visibility may be lower.

• Their ability to shape industry practices may be constrained.

Public Limited Company:

• Public limited companies often have more influence over industry standards and best practices due to their larger market presence and credibility.

• They can play a leadership role in setting industry standards.

91. Exposure to Litigation and Legal Risks:

Private Limited Company:

• Private limited companies may face legal risks and litigation, but they may be less visible targets for lawsuits compared to public limited companies.

• Legal disputes may be resolved more discreetly.

Public Limited Company:

• Public limited companies are more exposed to litigation and legal risks due to their higher visibility and larger number of stakeholders. Shareholder lawsuits and regulatory investigations are relatively common.

• Legal disputes involving public limited companies often receive significant media attention.

92. Impact of Stakeholder Activism:

Private Limited Company:

• Stakeholder activism in private limited companies may have a limited impact, as activists may face challenges accumulating a significant stake and influencing decision-making.

• The effects of stakeholder activism may be less pronounced.

Public Limited Company:

• Public limited companies are more susceptible to stakeholder activism. Activist investors can acquire shares in the open market and use their voting power to push for changes in strategy or governance.

• Stakeholder activism can have a substantial impact on public limited companies' operations and decision-making.

93. Strategic Mergers and Acquisitions:

Private Limited Company:

• Private limited companies can engage in mergers and acquisitions (M&A) activities, but the process may be less public and more discreet.

• M&A deals may involve negotiations with a limited group of stakeholders.

Public Limited Company:

• Public limited companies often engage in more high-profile M&A activities, and these transactions are subject to regulatory scrutiny and public disclosure.

• Public M&A deals can have a significant impact on the company's stock price and public perception.

94. Impact of ESG (Environmental, Social, and Governance) Factors:

Private Limited Company:

• The impact of ESG factors on private limited companies may be driven by internal values and stakeholder relationships. ESG initiatives may be less publicized.

• Private companies may prioritize ESG practices that align with their core values.

Public Limited Company:

• Public limited companies are subject to greater public scrutiny regarding their ESG practices. ESG reporting is often a mandatory requirement.

• Public perception of a company's ESG efforts can affect its stock performance and reputation.

95. Access to Government Incentives:

Private Limited Company:

• Private limited companies may have limited access to government incentives and subsidies, as these programs often prioritize publicly traded companies or specific industries.

• Access to government incentives may be more restricted.

Public Limited Company:

• Public limited companies may have better access to government incentives and subsidies, as they are publicly traded and subject to greater public and regulatory scrutiny.

• Government support programs may be more accessible to publicly traded companies.

96. Impact of Credit Ratings:

Private Limited Company:

• Private limited companies do not have publicly available credit ratings, as their debt is not publicly traded.

• They may need to rely on other measures to assess their creditworthiness.

Public Limited Company:

• Public limited companies often have publicly available credit ratings issued by credit rating agencies. These ratings can impact their ability to access debt financing and the terms of borrowing.

• Credit ratings are an important consideration for publicly traded companies.

97. Access to International Markets:

Private Limited Company:

• Private limited companies may face challenges in accessing international markets, as they may lack the resources and visibility needed to expand globally.

• International expansion may require strategic partnerships or alternative market entry strategies.

Public Limited Company:

• Public limited companies often have better access to international markets due to their publicly traded status and higher visibility. They can raise capital for global expansion more easily.

• Access to international markets can support growth and diversification efforts.

98. Impact of Shareholder Meetings:

Private Limited Company:

• Private limited companies may hold shareholder meetings, but they are typically less formal and may involve a smaller group of shareholders.

• Shareholder meetings may focus on key decisions and updates.

Public Limited Company:

• Public limited companies are required to hold formal shareholder meetings, such as annual general meetings (AGMs), where a broader range of shareholders can participate.

• AGMs provide a forum for shareholder engagement and voting on important matters.

99. Access to Crowdfunding:

Private Limited Company:

• Private limited companies may have limited access to crowdfunding as a source of financing, as crowdfunding platforms often cater to startups and small businesses.

• Crowdfunding may not be a viable option for established private companies.

Public Limited Company:

• Public limited companies may have access to crowdfunding platforms for specific initiatives or projects. Crowdfunding can complement traditional financing methods.

• Public companies can leverage crowdfunding for visibility and community engagement.

100. Impact of Economic and Regulatory Uncertainty:

Private Limited Company:

• Private limited companies may be more insulated from short-term economic and regulatory uncertainty, as they can focus on their specific business operations without the same market pressures.

• They can prioritize operational stability.

Public Limited Company:

• Public limited companies can be more sensitive to economic and regulatory uncertainty, as their stock prices can be influenced by macroeconomic factors and government policies.

• They may need to manage investor perceptions related to uncertainty.

Private limited companies and public limited companies differ in various aspects, including ownership structure, disclosure requirements, access to capital, governance practices, and their ability to navigate the complexities of the business environment. The choice between operating as a private or public limited company depends on a company's specific goals, growth trajectory, risk tolerance, and strategic considerations. Each type of company has its advantages and disadvantages, and businesses must carefully evaluate their options to make the most appropriate choice for their unique circumstances and objectives.

A private limited company is a closely held entity that requires a minimum of two or more individuals for its formation. In contrast, a public limited company is publicly owned and traded, necessitating a minimum of seven individuals for its establishment.

A company, in general, refers to a voluntary association of people with the common objective of achieving specific goals. It is considered a separate legal entity, distinct from its members, with features such as perpetual succession, a common seal, the ability to sue and be sued, and capital divided into transferable shares.

It's important to note that, in India, there is no longer a minimum paid-up capital requirement for incorporating either a private or public company, thanks to the Companies Amendment Act, 2015.

Here, we'll explore the distinctions between a Private Limited Company and a Public Limited Company:

Private Limited Company vs. Public Limited Company

1. Meaning:

• A Private Limited Company is not listed on a stock exchange, and its shares are privately held by its members.

• A Public Limited Company is listed on a recognized stock exchange, and its shares are publicly traded.

2. Minimum Number of Members:

• Private Limited Company: Requires a minimum of 2 members.

• Public Limited Company: Requires a minimum of 7 members.

3. Maximum Number of Members:

• Private Limited Company: Limited to 200 members, except for one-person companies.

• Public Limited Company: Unlimited members.

4. Minimum Number of Directors:

• Private Limited Company: Requires at least 2 directors.

• Public Limited Company: Requires at least 3 directors.

5. Articles of Association:

• Private Limited Company must create its own articles of association.

• Public Limited Company can create its own articles or adopt Table F.

6. Transfer of Shares:

• Private Limited Company restricts share transfer, subject to restrictions in its articles of association.

• Public Limited Company allows freely transferable shares traded on stock exchanges.

7. Public Subscription:

• Private Limited Company cannot issue shares or debentures to the public.

• Public Limited Company can invite the public to subscribe to its shares or debentures.

8. Issue of Prospectus:

• Private Limited Company is prohibited from issuing a prospectus.

• Public Limited Company can issue a prospectus or opt for private placement.

9. Minimum Amount of Allotment:

• Private Limited Company can allot shares without obtaining a minimum subscription.

• Public Limited Company cannot allot shares unless the minimum subscription stated in the prospectus is obtained.

10. Commencement of Business: - Private Limited Company can start its business after receiving a certificate of incorporation. - Public Limited Company requires a certificate of commencement of business after incorporation.

11. Appointment of Directors: - Private Limited Company can appoint two or more directors by a single resolution. - Public Limited Company requires separate resolutions for each director's appointment.

12. Filing of Consent to Act as Director: - Private Limited Company directors do not need to file their consent to act as directors. - Public Limited Company directors must file their consent within 30 days of appointment with the Registrar.

13. Retirement of Directors by Rotation: - Private Limited Company directors are not required to retire by rotation; they can be permanent. - Public Limited Company requires 2/3rd of directors to retire by rotation.

14. Place of Holding AGM: - Private Limited Company can hold its AGM anywhere. - Public Limited Company's AGM is held at the registered office or a designated location.

15. Statutory Meeting: - Private Limited Company has the statutory meeting as optional. - Public Limited Company must conduct a statutory meeting.

16. Quorum: - Private Limited Company requires 2 members for a quorum. - Public Limited Company's quorum varies based on the number of members.

17. Exemptions: - Private Limited Company enjoys various privileges and exemptions. - Public Limited Company does not have these privileges and exemptions.

Special Kinds of Private Limited Company:

• One Person Company (OPC): A company with a single member.

• Small Company: A company with paid-up capital not exceeding Rs. 50 lakh and turnover below Rs. 20 crores.

Private limited companies are closely held entities with restrictions on share transfer and limited members, while public limited companies are publicly traded with open share transferability and more regulatory requirements.

Thank You