HomeDifference betweenDifference between Private and Public Company

Difference between Private and Public Company

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Public Limited Company

According to the companies act 2017, the company in which liability of shareholders is limited. And its shares can be quickly sold and transferred to Private and Public Company. Moreover, there is no restriction on the maximum number of shareholders.

For example, PTCL and SNGPL etc.

Private Limited Company

According to the companies act 2017, Private and Public Company. The company is prohibited from inviting the public to subscribe. And its shares are not transferable. Moreover, the maximum number of members is fifty.

For example, Nepal(Pvt.)and HKB(Pvt.) limited company etc.

private vs public

Comparison basis 

Public company 

Private company

Number of members

There must be at least seven members, and there are no restrictions for the maximum number of members. There must be at least two members, and the maximum number of members is fifty.

Sale of shares 

A public limited company can sell its shares to the general public. Private limited companies cannot sell their shares to the general public.

Transfer of shares 

The shares of a public limited company can be transferred easily. The shares of the private limited company cannot be transferred easily.

Allotment of shares

In a public company, there is a restriction of minimum subscription for the allotment of shares. In the case of the private limited company, there is no restriction for the allotment of shares.

prospectus

A public company must issue its prospectus after obtaining a certificate of incorporation. There is no restriction on private companies for issuing a prospectus.

Publication of reports

A public company must publish its annual performance report. There is no restriction for the publication of annual reports.

Directors 

The minimum number of directors is seven. There must be at least two directors in a multi-member private company.

Statutory meeting

Public companies must hold statutory meetings. There is no compulsion for private companies to call a statutory meeting.

Written consent of directors

In public companies, directors have to give written consent that they are ready to act as the company’s directors. The directors of private companies are not required to give their written consent for directorship.

Tax relief 

The govt. Gives relief for rebates in tax to taxpayers for making investments in public companies’ shares. The govt. does not give relief or rebate in tax to taxpayers for making investments in private companies shares.

Loan 

Public companies cannot obtain loans after incorporation. Private companies can obtain loans after their incorporation.

Legal restrictions 

Public companies have to follow strict legal restrictions. Private companies follow fewer legal restrictions as compared to public companies.

Minimum subscription

It cannot obtain the certificate of commencement of business without fulfilling the conditions of minimum subscription. There is no need to fulfil the requirement of a minimum subscription.

Submission of reports

The registrar office has a compulsion to submit the various reports. i.e., auditors reports, profit and loss account, and balance sheet. There are no strict rules for the submission of reports to the registrar’s office. 

Size 

Public companies are suitable for both medium and large-scale businesses. Private companies are only suitable for medium-scale businesses.

management

In a public company, shareholders elect the management by voting. In private companies, owners are the members of management.

Title 

Every public company has to use the word” limited” after its name. The private company must issue the company to mention the word “private limited” after its name.

 

Also read: Difference between PGDM and MBA

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