Diffenence between Private Limited & Public Limited Company.
Bhawani Mahapatra
(Querist) 04 February 2011
This query is : Resolved
Dear Experts
Please explain the diffenence between Private Limited & Public Limited Company with relevent section of laws.
Basavaraj
(Expert) 04 February 2011
Answer
There are four main types of company:
* Private company limited by shares - this is the most common type of company. The important difference from a public limited company is that a private company may not offer its shares for sale to the general public.
* Private company limited by guarantee - members of this type of company do not make any contribution to the capital during its lifetime as they do not purchase shares. The members' liability is limited to the amount that they each agree to contribute to the company's assets if it is wound up.
* Private unlimited company - this type of company may or may not have a share capital and there is no limit to the members' liability. Because there is no limitation on members' liability, far less of the company's affairs have to be disclosed publicly than is the case with the other types of company.
* Public limited company - this type of company has a share capital and, the liability of each member is limited to the amount unpaid on shares that a member holds. The important difference from a private is that a public limited company may offer its shares for sale to the general public. It may also be quoted on the stock exchange.
A "private company" may be any of the first three on this list. Companies limited by guarantee and unlimited companies are private companies even if the word \"private\" is not used.
*There are still a few \"companies limited by guarantee with a share capital\". It has not been possible to form these since 1981 and they are ignored in this guidance.
* Company is, a company which are registered under the companies act, rules and regulations. In India it is registered under the companies act of 1956.
In the case of company there will be a written document as Memorandum of association and Articles of association.
Memorandum of association meant for external relation of the company and articles of association meant internal relations of a company. After fulfilling these procedures the Registrar of company issues certificate of incorporation and a company can function
formulation of companies are in many manner.
1. Private limited company
A Company incorporates with more than two person and it is limited to fifty members . In this case it is only a huge partnership and the liability is unlimited.
2.Public Limited companies.
A companies which is constituted with a minimum of seven members and maximum is unlimited, and members called share holders. Here the liability is limited up to level of what he is invested.
3.Government company.
A company which are incorporated holely or jointly with state and central government or 51% & 49% with other joint ventures or with other public limited companies. Here also liabilities are limited by shares.
4.Registered companies.
A company which are incorporated with a special resolution of the Parliament .
Here company means registered under companies act, and limited company means liability of company limited by shares.
All companies uses as 'limited' after it's name Public limited or private limited.
In the case of a voluntary organisation which are registered as pvt. ltd, though they can use only 'limited' after it's name.
Regards
Basavaraj
Advocate. Arunagiri
(Expert) 04 February 2011
Certain sections of company law not applicable to the private companies.
