Comparing Private Limited Company and Public Limited Company

Private Limited CompanyPrivate Limited Company and and Public Limited Company Public Limited Company

By:- Krishna Khataniar

Roll no:- 21

Year:- FY

Division:- 1

Contents

Definition as per Definition as per The Companies Act, 1956 The Companies Act, 1956

A Private Limited Company is a company A Private Limited Company is a company having a minimum paid-up capital of 1 lac.₹having a minimum paid-up capital of 1 lac.₹

A Public Limited Company is a company A Public Limited Company is a company having a minimum paid up capital of 5 lacs.₹having a minimum paid up capital of 5 lacs.₹

Differences

Min. 2 persons required

Can not trade share on stock market

May operate different businesses

AGM is not mandatory

Min. 7 persons required

Can trade share on stock market

Generally operates specific business

AGM is mandatory

Private Co. Public Co.

Similarities

Shareholders are owners

Limited LiabilityPvt. Plc.

Advantages of These Companies

Private Co. Public Co.

Limited liability Continuity of

existence More capital can be

raised as max. members can be 50

Limited liability Separate legal

entity, continuity of business

Can raise large capital

Shares transferable

Disadvantages of these companies

Private Co. Public Co.

¤ Shares can not be sold to general public

¤ Restricted to trade under name of an existing company

¤ Growth may be limited as max. shareholders are 50

¤ Costly as there are a lot of formalities for commencing

¤ Face management problems

¤ May suffer from diseconomies of scale

Income Tax slab

For Both Pvt. L.td Co. and Plc. Ltd. Co.

Income tax30%

Nil Surcharge

3% Education Cess

Conclusion

If you have a small capital, then Private Co. is preferable or if you have a large capital and if you want to have a large share in the market, you can form a Public Co.

References

Information:-

1.Wikipedia.com2.Dineshbakshi.com3.eHow.com4.http://company-registration.pro/

Photos and Clip arts:-

1.Clker.com2.Wikipedia.com

Thank You…