Distinctions Between Private and Public Companies

Private Ltd. Company

A Private Limited Company is a joint stock company, incorporated under The Indian Companies Act, 2013 or any other previous act. The maximum number of members is 200, excluding the current employees and the ex-employees who were the members during their employment or continues to be the member after the termination of employment in the company.

The company restricts the transfer of shares and prohibits invitation to the public for the subscription of shares and debentures. It uses the term ‘private limited’ at the end of its name.

Public Ltd. Company

A Public Limited Company or PLC is a joint stock company formed and registered under The Indian Companies Act, 2013 or any other previous act.

There is no defined limit on the number of members the company can have. Also, there is no restriction on the transferability of the shares. The company can invite the public for the subscription of shares or debentures, and that is why the term ‘Public Limited’ gets added to its name.

Difference Public Company:

1. Ownership: Owned by the State Government or Central Government or both.
2. Objective/Motive: To promote public welfare.
3. Social Objectives: They are launched to achieve social objectives like development of backward regions, creation of employment opportunities, etc.
4. Forms of Organisation: Departmental undertakings, Statutory Corporation and Government Companies.
5. Management: Managed by bureaucrats; hence efficient.
6. Financial Resources: Huge financial resources; no problem in expansion and growth.
7. Accountability: Accountable to the public through Parliament.
8. Political Interference: Comparatively more Political Interference.
9. Government Control: They are subject to strict financial control by the government.
10. Distribution of Income: Equitable distribution of income.

Difference Private Company:

1. Ownership: Owned by private individuals.
2. Objective/Motive: To maximize profits.
3. Social Objectives: Social objectives are not very important.
4. Forms of Organisation: Sole proprietorship, partnership, joint Hindu family business, cooperative societies and joint stock company
5. Management: Managed by professional managers; hence efficient.
6. Financial Resources: Limited financial resources; less scope for expansion.
7. Accountability: Accountable to the owners.
8. Political Interference: Less political interference
9. Government Control: They are not subject to strict financial control by the government.
10. Distribution of Income: Concentration of wealth in few hands.