In India, Private Limited Companies (Pvt Ltd) and Public Limited Companies (Ltd) differ in several key aspects. Here are the main differences:
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1. Ownership and Shareholders
Private Limited Company (Pvt Ltd):
Limited to a maximum of 200 shareholders.
Shares are privately held and cannot be offered to the public.
Often owned by a small group of people, such as family or close associates.
Public Limited Company (Ltd):
No maximum limit on the number of shareholders.
Shares can be offered to the general public and can be traded on a stock exchange.
Often owned by a large number of public investors.
2. Minimum Number of Directors and Shareholders
Private Limited Company (Pvt Ltd):
Minimum of 2 directors.
Minimum of 2 shareholders.
Public Limited Company (Ltd):
Minimum of 3 directors.
Minimum of 7 shareholders.
3. Share Transferability
Private Limited Company (Pvt Ltd):
Shares are not freely transferable. There are restrictions on the transfer of shares.
Public Limited Company (Ltd):
Shares are freely transferable and can be bought and sold on the stock exchange.
4. Capital Requirements
Private Limited Company (Pvt Ltd):
No minimum capital requirement.
Public Limited Company (Ltd):
Minimum paid-up capital requirement of ₹5 lakhs.
5. Regulatory Requirements
Private Limited Company (Pvt Ltd):
Lesser regulatory requirements and compliance compared to public limited companies.
Public Limited Company (Ltd):
More stringent regulatory requirements, including mandatory disclosures and stricter compliance with the Securities and Exchange Board of India (SEBI) guidelines.
6. Public Disclosure
Private Limited Company (Pvt Ltd):
Limited disclosure requirements to the public.
Public Limited Company (Ltd):
Extensive disclosure requirements, including publishing financial statements and annual reports.
7. Raising Capital
Private Limited Company (Pvt Ltd):
Cannot raise funds from the public.
Can raise capital through private placements, loans, and from existing shareholders.
Public Limited Company (Ltd):
Can raise capital from the public through Initial Public Offerings (IPOs) and other public offers.
8. Legal Status and Continuity
Both types of companies enjoy a separate legal status from their owners and have perpetual succession.
9. Compliance and Governance
Private Limited Company (Pvt Ltd):
Fewer governance norms. For instance, not mandatory to appoint independent directors.
Public Limited Company (Ltd):
Required to adhere to more complex governance structures, including appointing independent directors, forming audit committees, etc.
10. Taxation
Both types of companies are subject to corporate tax rates as prescribed under the Income Tax Act, though their compliance burdens differ due to the varying regulatory requirements.