Although public and private companies share some similarities, they possess significant legal distinctions. A Private Limited Company is collectively owned and operated by its members, whereas a Public Limited Company, as governed by the Companies Act 2013, has limited liability and extends its stock offerings to the public through mechanisms like an Initial Public Offering (IPO) or stock market transactions.
A comprehensive breakdown comparing Public and Private companies in India is presented in the following table:
| Aspects | Public Limited Company | Private Limited Company |
|---|---|---|
| Section | 2(71) of Companies Act, 2013 | 2(68) of Companies Act, 2013 |
| Definition | A company not qualifying as private, having a minimum paid-up share capital, and holding subsidiary company status | A company with specified minimum paid-up share capital, restricting share transfers, limiting members, and prohibiting public invitations |
| Applicable Law | Companies Act, 2013 | Companies Act, 2013 |
| Liability | Limited or Unlimited | Limited or Unlimited |
| Number of Members | Minimum 7, Maximum unlimited | Minimum 2, Maximum 200 |
| Directors | At least 3, Maximum 15 (expandable) | At least 2, Maximum 15 (expandable) |
| Statutory Audit | Mandatory | Mandatory |
| Board Meetings | At least 4 per year, limited 120-day gap | At least 4 per year, limited 120-day gap |
| Nominee | Not applicable | Not applicable |
| Minimum Share Capital | Not mandatory | Not mandatory |
| Annual Compliance | Submission of financials to the Registrar | Submission of financials to the Registrar |
| Suffix | Public Limited/Limited | Pvt. Ltd. |
| Taxation | Flat rate of 30% | Flat rate of 26% |
| Annual Compliance | Filing of forms for each financial year | Filing of forms for each financial year |
| Investment by Foreign Nationals | In accordance with FDI guidelines | In accordance with FDI guidelines |
| Fundraising | Allows public issues | Restricted to specific methods |
| Business Activities | Permits any business | Restricts certain businesses disallowing private investment |
| Conversion | Voluntary conversion permitted | Voluntary conversion permitted |
| Control and Ownership | Controlled by its members | Controlled by its members |
| Transferability | Easily transferable shares | Restricted share transfers |
