Difference between Private and Public company | under companies act 2013

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Public and private company | difference between private company and public company

Difference between public and private company - We all already know about private limited companies and public limited companies. Today we will talk about the difference between a private limited company and a public limited company. We will give another bonus tips, where we will say public limited company and private limited company should start in any business.

Shareholder or member

In case of a private limited company, the minimum shareholders should be 2 and the maximum shareholders should be 200. And in case of public limited company minimum 3 directors. And with that the minimum shareholder is 7 people. The minimum shareholders of a public limited company are 7, but there is no limit to the maximum shareholders. This is a benefit point in the case of a public limited company.

Compliance (Tax and audit)


In the case of a private limited company, it is compulsory to audit even if it is running on transover or capital loss. In case of a private limited company, all the compliances have to be met. This is compulsory in the case of a private limited company. And in the case of public limited companies, most things are the same. But the compliances of public limited companies are much higher. Since the transparency of a public limited company is more, its requirement becomes more. Again, managing & operating a public limited company is expensive.

Example:

Public Limited Company

  • Annual General Meeting
  • Financial Statements
  • Annual Return
  • Income Tax Returns
  • Secretarial Audit Report
  • Compliances under all Rules and Regulations associated with SEBI

Private Limited Company

  • TDS / TCS payment
  • GST payment and GST filing
  • Other payments of periodic dues
  • Filing of quarterly TDS returns
  • Advance tax payment
  • Filing of IT returns
  • Filing of tax audit reports


Governing Rules

For example, Companies Act 2013 is applicable on private limited companies. The Companies Act 2013 is also applicable to public limited companies. Most of the rules and regulations are applicable to Advantage Private Limited Company, all of them are applicable to Public Limited Company. In addition, public limited companies have some extra advantages and some disadvantages.

Perpetual Succession

Perpetual Succession means that this company will continue to exist whether it has a shareholder or a director or not. That shareholder or director can be replaced. Those shares are transferable. If a shareholder or director dies or if for some reason the shareholder dies, the company does not close, the company continues as before. This is the Perpetual Succession Concept. It is applicable to private limited companies and also applicable to public limited companies.

Limited Liability


We have already said about the limited liability in the details. If I tell you that the shareholder invests in a company as much as the percentage of the shareholder's liability is or can be said that the liability is limited to that. Shareholders have no liability for personal assets. It is applicable to both public limited companies and private limited companies.

Stock exchange

These two companies will be able to register on the stock exchange. But in the case of a public limited company there is no limit on the amount of maximum shareholders, so in the case of a public limited company the stock exchange is convenient and in the case of a public limited company the stock transfer is very fast. And in the case of private limited companies, registration can be done on the stock exchange but not as many benefits are available as in public limited companies.

Management Control


In the case of a private limited company, any decision can be taken very fast. But in the case of a public limited company, it is not possible because there are two or three shareholders or they are in management and they can make a decision very quickly. But in a public limited company there are many independent directors under the board of directors but still there are many SEBI requirements, so the board of directors is completely independent of the shareholder. Even if someone owns 70% of the shares, all the shareholders have to abide by the decision of the board of directors. On the one hand, we want to say that decision making becomes a little slow.

Bonus tips:

We will say that the private limited company has reached a good scale and its turnover is in crores. And the company that wants to expand its business should be able to meet the requirements of the public limited company. Such a company should be registered as a public limited company.

Or companies that want a proprietary structure just to do business. And for those who are new to startups, it would be best for them to register a private limited company.


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