An association or a legal entity formed by a group of individuals to start and manage a business is termed as a Company. A company is organized by the corporate laws of its jurisdiction. A company may be in a partnership or proprietorship depending on the structure they are defined on or it can be said that the business line of a company depends on its structure.
Companies can either be a public enterprise or a private enterprise. A public enterprise is the one in which the powers are not confined to some people and resides with the public. A private enterprise is the one in which the power is with a group of people and only they can make decisions for the company. A public company is denoted by Ltd and a private company is denoted by Pvt Ltd.
LTD vs Pvt LTD Companies
The main difference between Ltd and Pvt Ltd company is that in a Limited or Ltd company the shares of the company are open to everyone that is the public owns the company whereas in the Private Limited or Pvt Ltd company the shares of the company are in the private hands, it is regulated by the private promoters or a group of promoters.
Comparison Table Between LTD and Pvt LTD Companies
| Parameter of Comparison | LTD | Pvt LTD |
|---|---|---|
| Shareholders | In a public limited company, the shares are held by the public and are open to everyone. | In a private limited company, shares are held by the private promoters. |
| Minimum number of shareholders | A Ltd company requires at least seven shareholders in the company. | A Pvt Ltd enterprise requires at least two shareholders. |
| Maximum number of shareholders | A public Ltd company has no upper limit for the number of shareholders. | A Pvt Ltd company can have a maximum of 50 shareholders. |
| Transfer of shares | The transfer of shares in a public limited company is done through the stock market. | The shares of a private limited company are generally confined within a group of people and therefore are transferred with the approval of all shareholders. |
What is LTD Company?
Ltd. or Limited refers to a public limited company is a company in which the shares of the company are in the hands of the public. A Ltd company is open to everyone who wants to buy shares in it. It has to be transparent in its transactions and records and other activities. According to the Companies Act, a public company can only write Ltd after the name of their company and not public Ltd.
In a public Ltd company, the minimum number of shareholders must be seven while it has no limit for the maximum number of shareholders. The minimum capital requirement to start a public Ltd company is 500000. A public company must have at least three directors.
A public limited company needs approval from the registrar of companies for the commencement of any business. It has to be transparent in its transactions and records and other activities. A public company needs to issue a statement in the public to show its transactions and decisions.
A public company is listed on the stock exchange list, therefore, the transfer of shares takes place through the buying and selling in the stock market. A public company has the right to issue further shares to the existing shareholders after their approval.
What is Pvt LTD Company?
Pvt Ltd or Private Limited company is a company in which the shares of the company are held only by a group of individuals. A private limited company is not open to the public. According to the Companies Act, a private limited company is liable to some exemptions and privileges.
In a private limited company, the minimum number of shareholders is two while the maximum number of shareholders is 50. The minimum capital required to start a private limited company is 100000. A private limited company must have at least two directors.
To conduct any business a private limited company does not require approval from the governmental authorities. The owner of the company is free to make decisions related to the company. A private limited company is not forced or bound to issue statements to show their transactions and activities.
A private limited company is not necessarily listed on the stock exchange listing especially the small companies cannot opt for the stock market. The transfer of shares of the company is done with the approval of the current shareholders. Generally, these shares reside within a group of individuals or in a family.
Main Differences Between LTD and Pvt LTD Companies
- Ltd. stands for a public limited company whereas Pvt ltd stands for a private limited company.
- In a ltd company the shares of the company are held by the public whereas the shares of a Pvt ltd are held by the private promoters or a group of promoters.
- The shares of a Ltd company are open to the public whereas the shares of a Pvt ltd company are not open for the public.
- The minimum number of shareholders in a Ltd company is seven while it is two in a Pvt Ltd company.
- There is no maximum number of shareholders in a Ltd company whereas Pvt Ltd companies have a limit of 50.
- The shares of a Ltd company are listed on the stock exchange where this is not a case with a Pvt ltd company.
- The transfer of shares in a Ltd company is done through the trade in stock exchange whereas in a Pvt Ltd company the shares are transferred with the approval of all shareholders.
Conclusion
The companies have certain limitations whether it is a public limited company or a private limited company. These companies are made with a specific purpose and they need to serve their purposes with the rules and regulations laid down by the government of a country. However, private companies are given some exemptions and privileges under the Companies Act for the social works they do.
References
- https://www.jstor.org/stable/40277684
- https://papers.ssrn.com/sol3/papers.cfm?abstract_id=2362751