As the name suggests, a Private Limited Company Registration in India take place where every share is restricted in a closed group of individual or Shareholders and is run by its Board of Director but Public Ltd. Company takes place where its formation, working, its winding up is strictly governed by rules, regulations and applicable laws. This type requires minimum 7 members to and the required (5 lacs) paid-up capital, as may be prescribed, and no limit on the amount of members. There is free transferability of shares (Refer case: Western Maharashtra Development Corporation Ltd. V. Bajaj Auto Limited, 2010).
The Companies Act contains provisions regarding the legal formalities for setting up of a public limited company.
Difference between a Public and a Private Limited Company:
Majorly, the restrictions which are applicable on a Private Limited Company Formation in India are not applicable to Public Limited Companies.
The public ltd. company refers to a company that is listed on a recognised stock exchange and traded publicly with limited liability of its members in case of winding up.
A Pvt Ltd. Company is one that is not listed on a stock exchange and is held privately by the members. There must be at least 7 members to start a public company. As against this, the private company can be started with minimum 2 members.
A public company should have at least 3 directors whereas the Private ltd. company can have a minimum of 2 directors.
Procedure for registering of a Public Limited Company:
Advantages after incorporating a Public Limited Company:
-Higher Capital: A public company can sell its shares to the public and anyone can invest their money, the capital that can be raised is larger. A sole proprietorship, or ordinary business partnership, cannot usually raise the same amount of capital without additional leverage.
-Easy access to finance: A public limited company can easily obtain finance than to other smaller forms of business. Banks and other financial institutions are more willing to extend financing to public limited companies.
-Popularity and Brand Awareness: This type of business is often always listed on a stock exchange, people will be able to easily and quickly recognize the brand or name of the company. The more brand recognition a company has, the more prosperous business it can conduct.
-A Continuous life: A Public Company will continue to operate for as long as there is a board of directors and management staff that will be the helm of the company. In other types of companies, the business entity ceases to exist once the founding members are no longer present or if there have been changes to the company’s ownership structure.
For detail about Public Ltd. or Private Limited Company Incorporation in India consult Company Vakil and avail their first Free Legal Consultation Benefits.