In the Public sector company, the government shares half or even more of the share of profit owned by the company. To say they are government-controlled companies. An example includes –
- State Bank of India
- India Oil Corporation
A Public limited company is a private company. A single or group of individuals usually runs the business.
Example include – Reliance Industry
Public Sector vs Public Limited Company
The main difference between the Public sector and Public Limited Company is that Public sector company is controlled by the government and public limited is handled by shareholders.
Both these terms are not clear to most of the people and often lead to a mistake in choosing the right path for them.
The public sector has a lesser number of shareholders whereas Public limited has more than fifty shareholders. Though there is a lot of difference between these two.
Comparison Table Between Public Sector and Public Limited Company (in Tabular Form)
| Parameter of Comparison | Public Sector | Public Limited |
|---|---|---|
| Character | Public sector companies are controlled by the state or central government. | Private limited companies are handled by an independent group of people. |
| Shareholders | The number of shareholders is less than two. | Here the number of shareholders exceeds more than fifty. |
| Meeting | The public sector must call a statutory general meeting of members. | The public limited company doesn’t need to call a statutory general meeting of members. |
| Share market | A public sector company is not listed in the share market. | A public limited company is listed in the share market and also requires going for an IPO. |
| Commencement | Public sector companies require a certificate for commencement after incorporation. | Public limited companies can immediately start their business as rules are up to their hand. |
What is Public Sector Company?
A Public sector company is controlled by the state, central government, or local government. This type of company mainly looks to benefit people’s life with less importance to profit.
They are usually a large business with the same level of liability.
Advantages of a public sector company:
Protection of public interest: Unlike the PLC, the public sector companies formulate policies for public welfare.
Policies are subjected to minstrel review and parliamentary scrutiny. Thus public sector companies are always the priority of customers.
Instant work: As bureaucracy and red-tapism is reduced to a considerable extent, speedier decisions can be taken. Thus it has better management.
Disadvantages of public sector company:
Political interference: Though autonomy functions still the strong influence of party and politics cannot be completely avoided. They are not allowed to set their price even if there are changes in the global market.
Financial problem: When a public sector company incurs huge losses, the government makes subsidies to cope up with the loss. These subsidies regularly can affect the economy of the country.
What is Public Limited Company?
A public limited company is formed by shareholders with no governmental control. It is a small business in which the liability is limited.
Limited liability encourages investors to invest, as they know they lose or earn only the part they share. Its shares are bought and sold on the Stock Exchange.
Advantages of public limited company:
Capital: The main advantage of a public limited company is that large amounts of capital can be raised quickly.
Bulk buying: A public limited company is highly benefited from bulk buying. They can invest in different fields and at the same time share the profit with the shareholders.
Disadvantages of public limited company:
Takeover bid: The main disadvantage of a public limited company is that the business can be lost from the hands of the original shareholder if large quantities of shareholders are purchased. Dis economics: the business may become too large to handle as a result annual accounts have to be opened for public inspection.
Main Differences Between Public Sector and Public Limited Company
The key differences between them are listed below:
- Public sector company is controlled by the government with a limited number of shareholders, whereas the public limited company is independent private with a large number of shareholders.
- A public sector company is not listed in the share market, but a public limited company is listed in the share market as well as requires an IPO.
- Public sector companies mainly think of customer welfare and less about financial profit. The public limited company thinks more about profit, share, and less about public welfare.
- Public sector company is a large business that is handled with proper guidance ministries and parliament but, a Public limited company is a small business that is controlled by the director and follows the rule of liability.
- Ownership can never be taken in public sector companies. Public limited has the fear of losing ownership by the process of a takeover bid in the stock exchange market.
Conclusion
So, which one do you feel is the right fit for you – public sector or public limited company? Always make sure that both these terms link to the economy and they expect you to serve the common people and the country.
If you are thinking of starting your own business it is better to go with a public limited company. Here, you can invest a little sum of money with other partners and grow your business.
Applying for a public sector company may require some special skills and training and a huge sum of money. Moreover, the government may not permit you from your status.
Thus now you have a clear concept of these two financial terms. Choose wisely!
References
- https://pubs.iied.org/pdfs/16017IIED.pdf
- https://repub.eur.nl/pub/59129/KLIJN_et_al-1995-Public_Administration.pdf