What is Difference between Public Limited and PVT LTD Company?

When people start a business, they have to decide what kind of company to make. Two common types are public limited companies and private limited companies. These two types of companies are different in many ways. Let's explore these differences to help you understand which might be better for your business.

What is a Private Limited Company?

A private limited company is a type of business that a small group of people own. It's like a club with a few members. These members are called shareholders. These members own parts of the company which are called shares. In a private limited company, these shares are not sold to everyone. Only certain people can buy them. Private Limited Company Registration in India is much simpler.

Key Features of a Private Limited Company:

Small Group of Owners: Usually, only a few people or families own a private limited company.
No Public Trading: Shares of a private limited company cannot be bought on the stock market.
Fewer Rules: The government doesn't make private limited companies follow as many rules as public companies.
Quick Decisions: Because there are fewer owners, private limited companies can make decisions faster.
Limited Money: It can be harder for private limited companies to get a lot of money to grow their business.

What is a Public Limited Company?

A public limited company is a business that many people can own. A public company is like a big club that anyone can join by buying its shares. The company sells parts of itself, called shares, to the public. Anyone can buy these shares on the stock market. Public Limited Company Registration is complex compared to private one.

Key Features of a Public Limited Company:

1. Many Owners: Lots of people can own parts of a public limited company.

3. Public Trading: You can buy and sell shares of public limited companies on the stock market.

4. Many Rules: The government makes public limited companies follow a lot of rules.

5. Slower Decisions: With more owners, it can take longer to make big decisions.

6. More Money: Public limited companies can often get more money to grow their business.

Comparing Private and Public Limited Companies

Let's look at how these two types of companies are different:

1. Who Owns the Company?

Private Limited: A small group of people
Public Limited: Many people from the public

2. Where Can You Buy Shares?

Private Limited: Not on the stock market
Public Limited: On the stock market

3. How Many Rules Do They Follow?

Private Limited: Fewer rules
Public Limited: Many rules

4. How Fast Can They Make Decisions?

Private Limited: Usually faster
Public Limited: Often slower

5. How Easy Is It to Get Money?

Private Limited: Can be harder
Public Limited: Often easier

6. Who Watches What They Do?

Private Limited: Fewer people watch
Public Limited: Many people watch, including the government

Feature | Private Limited Company | Public Limited Company

Ownership | These are owned by a small group of people or families | Owned by many shareholders from the general public

Number of Shareholders | Usually limited to 200 | Can have unlimited shareholders

Share Trading | The shares of pvt company are not traded on public stock exchanges | The shares of public company are freely traded on public stock exchanges

Initial Public Offering (IPO) | Not required | Required to become a public company

Regulatory Oversight | Less strict, fewer regulations to follow | More strict, must follow many regulations

Financial Reporting | Less frequent, may be private | Regular public disclosures required

Decision Making | Faster, often made by a small group | Can be slower, involves board of directors and shareholders

Capital Raising | Limited to private investors or loans | Can raise large amounts through public share sales

Minimum Capital Requirement | Lower | Higher

Public Scrutiny | Less public attention and scrutiny | High public visibility and scrutiny

Management Control | Founders often maintain strong control | Control can be diluted among many shareholders

Compliance Costs | Generally lower Higher due to more regulatory requirements

Growth Potential | May be limited by capital constraints | Can grow rapidly with access to public funds

Which One Should You Choose?

Choosing between a private and a public limited company depends on your business needs.

You might choose a private limited company if:

You want to keep control in a small group
You want a simple process for Company Registration in India
You don't need a lot of money right now
You want to make decisions quickly
You don't want to follow too many rules

You might choose a public limited company if:

You want many people to be able to own part of your company
You need plenty of money to grow your business
You're okay with following many rules
You want your company to be well-known

Remember, you can start as a private limited company and later change to a public limited company if you want. Many big companies started this way.

Conclusion

Private limited and public limited companies are two different ways to set up a business. When you're starting a business, think about what you want for the future. No matter which one you choose, starting a company is a big step. It's a good idea to talk to a lawyer or a business expert before you start the process of Company Registration in India. PSR Compliance can help you set up both with ease. Get in touch with us today to start your company today!