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A Private Limited Company is a type of business that’s owned by a small group of people — at least two people are needed to start it. In comparison, a Public Limited Company is open to the general public, and you need a minimum of seven people to form one.
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A company is simply a group of people who come together to do business and reach certain goals. In legal terms, a company is treated as a separate person, different from the people who own or run it. It continues to exist even if members change (this is called perpetual succession). A company can also have a common seal, sue or be sued, and its capital is divided into shares, which can be transferred to others.
| Point of Comparison | Private Limited Company | Public Limited Company |
|---|---|---|
| Meaning | Owned by a small group of people; shares are not open to the public. | Listed on the stock market; shares can be bought or sold by anyone. |
| Minimum Members Needed | At least 2 people. | Minimum 7 people. |
| Maximum Members Allowed | Up to 200 (can be more if a special approval is passed). | No upper limit; unlimited members allowed. |
| Minimum Directors Required | At least 2 directors. | At least 3 directors. |
| Articles of Association (AOA) | Must create its own rules (AOA). | Can create own rules or use the standard format (Table F). |
| Share Transfer | Shares can’t be easily sold or transferred; restrictions apply. | Shares can be easily traded on the stock market. |
| Public Offerings | Cannot offer shares or debentures to the public. | Can raise money from the public by selling shares or debentures. |
| Minimum Share Subscription | No minimum amount required for issuing shares. | Must meet a minimum subscription as mentioned in the prospectus. |
| Prospectus | Not allowed to issue a prospectus. | Can issue a prospectus or raise money privately. |
| Start of Business | Can start working after getting the incorporation certificate. | Needs both incorporation and commencement certificates to begin. |
| Appointing Directors | Can appoint multiple directors in one resolution. | One resolution = one director only. |
| Retirement of Directors | Directors can continue without retiring; long-term possible. | 2/3rd of directors must retire in rotation. |
| Consent Filing | No need to file consent with the Registrar. | Consent must be filed within 30 days of appointment. |
| Annual General Meeting (AGM) | Can be held anywhere. | Generally held at or near the registered office. |
| Statutory Meeting | Not compulsory. | Must be held. |
| Special Benefits | Gets many legal relaxations and benefits. | No such special benefits. |
| Quorum for Meeting | Just 2 members present is enough. | Depends on total members: • Up to 1000 – 5 members • 1000 to 5000 – 15 members • 5000+ – 30 members |
A Private Limited Company is a type of business registered under the Companies Act, 2013 or any law that’s in effect at the time of registration. This kind of company doesn’t sell its shares to the public and isn’t listed on any stock exchange.
It also has some restrictions on how its shares can be transferred. The company’s financial risk (liability) is limited only to the amount of shares the members hold.
A Private Limited Company can have up to 200 members, but this number doesn’t include current or former employees who were members while working and continued as members even after leaving. Also, if two or more people hold shares together (joint shareholders), they are counted as one member.
• A minimum of 2 directors is needed.
• You can have up to 15 directors on the board.
• At least 1 director must be an Indian citizen and resident.
• The other director(s) can be from another country.
• There must be at least 2 shareholders to start the company.
A Public Limited Company (PLC) is a type of business that’s registered under the Companies Act, 2013 or older company laws in India. It’s a company where the public can buy shares or debentures. These shares are offered through something called an Initial Public Offering (IPO) and are listed on at least one stock exchange.
The best part? The owners (called shareholders) are only responsible for the money they have invested. They don’t have to pay anything more if the company has a loss.
• You need at least 3 directors to start the company.
• There must be a minimum of 7 shareholders.
• At least one director should have a Digital Signature Certificate (DSC). For this, self-attested ID and address proof are enough.
• All directors must have a DIN (Director Identification Number).
You must mention the objectives or purpose of the company while applying for registration.
If you’re a small to medium business or startup, a Private Limited Company is often the better choice. It requires less compliance, offers better control, and is easier to manage. If you’re planning to raise large capital and go public later, a Public Limited Company is more suitable.
Choosing between a Private Limited and a Public Limited Company depends on your business size, goals, and plans. For most startups and MSMEs, a Private Limited is easier to register and maintain. If you’re aiming big, Public Limited could be your path. Need help with Business Registration in Rajasthan? We’ve got you covered.
We’re your trusted partner for Private Limited Company Registration in Rajasthan and Public Limited Company Registration, from paperwork to guidance, and we simplify everything. Our expert team makes sure your registration is smooth, compliant, and quick, saving your time and money.
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CA Jitendra Agarwal, a Chartered Accountant, is an experienced Income Tax Advisor with a proven track record in tax planning and compliance.
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