Difference Between Private Limited & Limited Company

Please help me understand the major differences between a private limited company and a limited company.

Thank you.

Hi,

A company is called a private limited when all its shares are in private hands. A Pvt Ltd Company is owned by a group of promoters. On the other hand, the shares in a Public Limited company are open to everyone. The company is not in the hands of a few promoters, but the public owns it.

There is also a difference in the number of shareholders in the two types of companies. In Private Limited companies, the minimum number of shareholders should be two, and the maximum is 50. On the other hand, the minimum number of shareholders in a Public Ltd Company is seven, and there is no limit to the maximum number of shareholders.

When talking about shares, the shares can be freely transferred in a Public Limited Company, whereas it is not possible in a Private Limited company. If ever the shares of a Pvt Ltd company have to be transferred, the consent of the shareholders must be sought. Pvt Ltd Company cannot make a public offer of its shares. On the contrary, Ltd companies can make a public offer through advertisements.

The shares of a Limited company are listed in the stock exchange, whereas it is not the case for a Private Limited Company. This means that trading happens with a Ltd company in the stock exchange, and nothing of that sort happens with a Pvt Ltd company.

A Private Limited company is a partnership firm, whereas a Public Limited company is a full-fledged corporate body.

Thank you for the wonderful explanation, Garima. I have a query: According to HR, which company will be good for the career - a private limited (Pvt Ltd) or a public limited (Public Ltd) company?

Regards,
Ramkishore

Hi there,

I have experience working with both types of companies, so in my opinion, it shouldn't be judged based on private or public limited status. It depends on where your work profile is strong and where you find a good environment because, ultimately, what matters is your satisfaction, which is based on your work profile.

Dear Garima,

Thank you for providing valuable information about the differences between a Private Limited Company and a Public Limited Company. I appreciate your knowledge-sharing in this forum.

Regards,
Sravan

Hi,

The difference between a Public Limited and Private Limited company is very technical. Garima has explained it very nicely. I also agree with her that it does not matter which type of company you work for. You should focus on your role within the company.

Regards,
CS Mukesh TANK

Understanding the Differences Between Private and Public Limited Companies

The shares of a Private Limited Company are closely held, meaning the ownership is controlled by a few individuals or entities, such as a company or trust. Because the shares are closely held, the reporting structure and regulatory framework for maintaining a Private Limited Company is considerably simpler compared to a Public Limited Company.

The shares of a Public Limited Company, on the other hand, are held by a large number of people and are traded on stock exchanges like the BSE or NSE. Since a large number of the public are invested in a Public Limited Company, SEBI is involved in monitoring these companies, and the reporting requirements are much more stringent.

Hope this helps!