Difference between Public Limited and Private Limited Companies

Introduction

Companies can be Public Ltd. or Private Ltd. based on ownership and rules. A Public Ltd. company can sell shares to the public, while a Private Ltd. company is owned by a small group. Knowing the difference helps businesses choose the right option.

1. Public Limited Company (PLC)

A Public Limited Company (PLC) is a type of business entity that is registered under the Companies Act, 2013. It is a company that can sell shares to the public and can be listed on a stock exchange.

Key Features of Public Limited  company

• Can sell shares to the public through the stock market.
• Requires a minimum of two directors and at least seven shareholders.
• Must have “PLC” in its name.
• Requires a minimum share capital (varies by country, e.g., £50,000 in the UK).
• More regulatory compliance and public disclosure requirements.

Advantages of Public Limited  company

• Can raise large capital by selling shares.
• More credibility and public trust.
• Ownership can be transferred easily through shares.

Disadvantages of Public Limited  company

• More legal regulations and reporting obligations.
• Risk of takeover if majority shares are bought.
• Expensive to set up and maintain.

2. Private Limited Company (Ltd.)

A Private Limited Company (Pvt Ltd) is a business that is privately owned and registered under the Companies Act, 2013. It is a popular choice because it protects the owners from personal financial risk, operates as a separate legal entity, and makes it easier to raise funds.

Key Features of Pvt Ltd Company

• Shares are not available to the public.
• Requires a minimum of one director and one shareholder.
• Must have “Ltd.” or “Pvt Ltd.” in its name.
• No minimum share capital requirement in many countries.
• Limited liability for shareholders.

Advantages of Pvt Ltd Company

• Greater control over the business (no outside shareholders).
• Less regulatory burden than PLCs.
• Lower risk of hostile takeovers.

Disadvantages of Pvt Ltd Company

• Limited ability to raise funds compared to PLCs.
• Ownership transfer is more restricted.
• Limited growth potential compared to PLCs.