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A Complete Overview: Private Limited Company Vs Public Limited Company

Private Limited Company Vs Public Limited Company

While setting out a business, businessmen have enormous choices as to the kind of enterprise entity that they can form. The Indian Business Laws gives a myriad of options which include Private Limited Company, Public Limited Company, LLPs, Sole Proprietorships, and so on. A businessman can create an entity according to the funds to be invested, various company members, the weightage of liabilities, and so on.

The two most common business structures in India are private limited companies and public limited companies. Both business structures have different identities and have advantages and disadvantages. As a result, choosing the type of business depends on the fundraising goals of the entrepreneur. This write-up will cover every aspect of private v/s public companies. In addition to this, you will come to know about the list of the necessary documents needed for Private Limited Company Registration and Public Limited Company Registration.

What is a Private Limited Company?

A privately-owned company for small enterprises is called a private limited company. In a private limited company, each member’s liability is bound to the number of shares they individually own. Shares of Private Limited Companies cannot be traded openly. People out there willing to form a private company can take our expert’s guidance for an online private limited company with ease. Taking our expert’s assistance would make the private limited company registration process easier.

Documents Required for Private Limited Company Registration

Following listed below are the list of all documents needed for private limited company registration.

  • Photograph of each Director
  • PAN Card of each Director 
  • All Directors’ Identification (Driver’s Licence, Passport, or Voter ID)
  • Utility bills, such as an electricity bill, can count as proof of a registered office’s address.
  • Electricity Bill, Most Recent Bank Statement, or Mobile Bill as Self-Attested Residential Address Proof for each Partner (not older than 2 months)

What Conditions Should be Fulfilled for Private Limited Company Registration?

In India, registering a company with the Ministry of Corporate Affairs is obligatory. The entrepreneur must take into account a number of aspects before starting a company in India. Discussed below are the conditions to be fulfilled for private limited company registration.

Members: As per the Companies Act of 2013, a minimum of two and a maximum of 200 members or shareholders are needed before registering a company.

Directors: For a private limited company to be registered, there must be a minimum of two directors. The director identification number (DIN), which is issued by the ministry of corporate affairs, shall be obtained by each director. Moreover, a director must have lived in India for at least 182 days in the preceding calendar year in order to qualify as a resident of India.

Name: One of the key elements of a private limited company is it. The name of the company is divided into three parts: name, activity, and private limited company. It is mandatory that all private businesses must conclude their company names with the phrase private limited company.

Registered office address: The owner must provide the temporary address of the business until it is registered when applying for company registration. However, after the business has been registered, the registered office’s permanent address must be provided to the company registrar.

Digital signature certificate: Everything is done online in the modern world. Every director of a company is required to get a digital signature certificate which can be used to confirm the legitimacy of the papers as all submissions are made online.

What is a Public Limited Company?

Public limited companies are the best option for small and medium-sized businesses looking to obtain equity capital from the general public since they have all the rights of a corporate organization with limited liabilities. Thus, an applicant must collect all documents required for online public limited company registration. For better understanding, consult with our experts. We are a reliable and trusted online company registration consultancy intended to assist people with the Online Private Limited Company and Online Public Limited Company registration process.

According to the Companies Act of 2013, a “public company” is one that adheres to limited liability and is permitted to make an initial public offering of its shares to the “general public” (IPO). If a firm is listed on the stock market, a person can also purchase shares of that company through the stock market. A joint-stock corporation is another name for a public limited company. The Indian Companies Act of 2013’s regulations govern this type of business plan.

Documents Needed for Online Public Limited Company Registration

Following discussed below is the list of the documents needed for online public limited company registration: In case, you come across any sort of issue, then without any further ado, connect with our professionals. Our Public Limited Registration Consultancy is popularly known for helping out people by making the registration process easier

  • Identity documentation for each director and shareholder.
  • Address verification for each director and shareholder.
  • PAN cards for each shareholder and director.
  • Utility bill for the location you’ve suggested for your Public Limited Company’s registered office.
  • A letter of no objection from the owner of your registered office.
  • Directors’ DSCs (Digital Signature Certificates).
  • Each director’s Director Identification Number (DIN).

Eligibility Criteria for Online Public Limited Company Registration

There are a few key prerequisites that must be met in order to register as a public limited company, and they are as follows:

  • A public limited company requires at least 7 shareholders.
  • Establishing a Public Limited Company requires a minimum of 3 Directors.
  • When submitting self-attested copies of identification and proof of address, DSC of one of the Directors is required.
  • The Directors must have a DIN.
  • Applications must be submitted for the choice of the company’s name.
  • A contract is formed that includes the company’s primary purpose clause. After registration, this object clause will outline the primary goals of a Company.
  • The application must be submitted to the ROC together with all required paperwork, in the E Forms SPICe Part b. SPICe MOA. SPICE AOA Agile Pro. INC.9.
  • The ROC’s specified registration costs must be paid.
  • After getting approval from the ROC, the firm should apply for the business commencement certificate in INC 20A.

What Is the Difference Between a Public Limited Company and Private Limited Company?

A public limited company is one whose shares are generally publicly traded and are listed on a stock exchange. Shares of a private limited corporation, on the other hand, are neither exchanged nor is it listed on the stock exchange. Only its members have individual ownership of it.

  • A public company must have seven members as a minimum to be established. In contrast, a private limited can be established with as few as two members.
  • Arranging a statutory general meeting of members is required in the case of a public company. A private company is not subject to the same kind of obligation.
    If a company is publicly listed, it must provide a prospectus or statement. A private company, however, is an exemption from this.
  • There are a few restrictions in transfer of shares in private limited business. Whereas stockholders in a public firm are allowed to transfer their shares freely.
  • The reach of a private limited company is constrained since there are few limitations and few participants. On the other hand, a public company has a broad reach. This is due to the fact that the business’s owners are subject to several regulatory limitations and are able to seek funds from the general public.
  • A public limited corporation has to deal with more regulations. This is because the general public, who are shareholders or prospective shareholders, have access to a lot of information. It costs a lot of money to compile reports and disclosures that adhere to SEBI standards.
  • General meetings of a private limited corporation are held in order to get a signed written resolution.
  • Private companies may opt to hire a company secretary only after having paid up capital of RS 10 CR or more, at their choice, whereas public companies which are listed are required to do so.

Conclusion

When the Company Act, 2013[1] was approved, the majority of business owners instantly adopted a private limited company framework. Due to strict restrictions and minimal compliance, it has been an easy pick for the majority of start-ups in the country since it enables the firms to have more control. Additionally, private limited companies can be formed without needing paid-up money, helping start-ups launch their enterprises without incurring difficulty. Public limited companies are good at maintaining transparency since the public is constantly exposed to them.

FAQ’s

Q:- How many shareholders may a private limited company have in total?

In a private limited company, 200 is the maximum number of investors.

Q:- Can anybody buy stock in a public limited company?

Public limited companies that are listed on a common stock exchange may offer equity to the general public.

Q:- Anyone can buy stock in a private limited company?

No, A Private limited company’s equity can only be owned by the members.

Q:- Can Foreign nationals or NRIs be permitted to serve as directors in public limited companies?

After acquiring a Director Identification Number, an NRI or foreign national may serve as a director in a public limited company. On the Board of Directors, however, at least one Director must be an Indian resident.

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