What is the difference between private limited company and share company

There is no market place for the shares and the articles will tightly control their transfer. Therefore to many people the difference between a private company and a public company is that the former cannot offer its shares for sale to the general public, whilst the latter can. Whilst this is broadly true, there are numerous other differences between the two.

This ability however comes at a price in terms of a much greater number of restrictions and a considerable loss of privacy. There is a much greater legislative burden to adhere to, both under the Companies Act as well as the Financial Services and Markets Act and all the additional rules particularly that this latter piece of legislation entails.

There will also be the rules of the market on which the company has its shares listed, for example, the London Stock Exchange.

This greater regulatory burden, increased scrutiny and the greater amount of information that must be made available to the public, is one of the reasons why even some large companies, such as Boots the chemist, choose to operate as private companies it was re-registered as a private company following its merger in with Alliance Unichem.

To start a public limited corporation, at least seven people must be present. A private limited business can be formed with just two people. As the name suggests, public limited companies are bound to have more people in the company as compared to private limited companies.

The maximum number of shareholders in a public limited company is unlimited. In a private limited business, the maximum number of shareholders is two hundred subjected to some orders, excluding the firm's previous and present workers. A private limited company can sell their stock to an unlimited number of people but when it comes to the public limited companies, the numbers change drastically.

To start doing business, a public limited company must obtain both the Certificate of Incorporation and the Certificate of Commencement of Business.

To begin the business, a private limited company must get a certificate of incorporation. Only that one certificate will do for a private limited company, unlike the public limited one.

Referred blog: Business Analytics Framework. Again some things are not the same between these two types of companies. Before issuing shares, a public limited company must have a certain amount of capital. A private limited business, on the other hand, has no such restrictions and is free to distribute shares. A public limited business can issue shares to the general public. Before issuing shares, it must either issue a prospectus or file a statement in place of a prospectus.

A private limited corporation, by law, has no authority to invite the public to its meetings and, as a result, cannot produce a prospectus. They can't get the public to buy stock in the company. Also read: Benefits of Stock Markets. In a public limited corporation, it is simple to transfer shares. Members' rights to transfer their shares in a private limited corporation are limited by the Articles of Association. Within six months after the start of operations, a public limited company must conduct a statutory meeting.

The statutory report should be filed with the Registrar of Companies. A statutory meeting is not required for a private limited corporation as per the laws made for it. A public limited company may or may not have Articles. Also read: Business Process Analysis.

In the management of a public limited corporation, there should be at least three directors. A private limited corporation must have at least two directors to manage the company. In a public limited corporation, the directors' written agreement to function as such is required.

In a private limited corporation, the powers of directors decrease. For any such thing, the permission of the directors is not required. To be eligible to serve as a director of a public limited company, a person must own a particular number of shares. The directors of a private limited corporation are exempt from this criterion. In a public limited corporation, at least two-thirds of the directors must depart from management via rotation.

In a private limited business, there is no requirement to retire. This can be because of the less no. Recommended blog: What is M-commerce? The term "Limited" must be added to the end of the name of a public limited business. The words "Private Limited" must be added to the end of the name of a private limited corporation.

There are several advantages to operating a private limited company , including the following:. There are a few disadvantages to operating a private limited company , and these include:. There are many advantages to operating an LLC , including the flexibility, tax benefits, and simplicity in forming this type of business structure.

All states in the U. Another benefit is the fact that, unlike corporations , LLCs need not hold annual meetings or keep minutes of such meetings. Another benefit is the significant flexibility in terms of operating an LLC.