Understanding Business Structures: What's the Difference Between a Pvt Ltd and an Ltd Company?

Hi All,

I have a question to ask: what is the difference between a PVT LTD company and an LTD company (is it also called a public LTD company)? Please, someone tell me.

Regards,
Jaanu

Private Company:

A private company is one which has a minimum paid-up capital of one lakh rupees and which, by its articles, puts:

a) Restrictions on membership: minimum 2 and maximum 50 members.
b) Restrictions on transferability of shares: the members do not have the right to transfer their shares freely. There are restrictions on their rights.

Prohibition of the issue of a prospectus: the company must prohibit their invitation to the public to subscribe to its shares and debentures.

Public Company:

A public company is one that is not a private company. Thus, if the articles of a company do not provide the aforementioned three restrictions, it shall be a public company. A public company requires a minimum of seven members, and there is no limit on maximum members. The shares and debentures of a public company may be quoted on a stock exchange and are freely transferable.

Hi Jaanu,

Very simply speaking, as per Company Law, 1956:
A Private Limited Company is one whose equity is held closely (privately) among stakeholders, being not less than 2 and not more than 50. The shares of such a company are not traded publicly. The provisions also specify the constitution and appointment of the Board of Directors.

A Public Limited Company is one whose equity is held publicly. Thus, a Public Limited Company can be promoted by a minimum number of promoters eligible for the purpose (not less than 7). The shares of such a company are registered in a stock exchange and can be traded. Obviously, the issue is governed by the jurisdiction of regulatory authorities functioning under the RBI guidelines.

Hope for the time being this information is good enough.

Bye,
Bibhu Prasad Das :-P

In one sentence: If a company's shares are distributed to the public, then it is a Public Ltd company; if not, then it is a Pvt Company.