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Difference Between Limited Company and Private Limited Company

Limited Company vs Private Limited Company
 
A private limited company is one that is owned privately by a group of private individuals. A limited company is a public limited company that is owned by the general public.

All the shares of a private limited company rest only in the hands of a few people or promoters. Most of the shareholders in a private limited company will consist of very close groups of relatives or friends. On the other hand, the shareholders in a limited company are the public.

A private limited company cannot list its shares in the stock exchanges, which means that it cannot be offered to the general public. If at all a shareholder wants to transfer the shares, he should have the approval of other shareholders. For limited company shares, they are listed in the stock exchange and any person can buy and sell them. The limited company can also invite the public to subscribe to its shares, whereas it is not possible with a private limited company.

In order to start a private limited company, there is only the need for two shareholders. But a minimum of 50 shareholders is needed for starting a limited company.

In terms of legal formalities, the limited company has to follow certain stringent rules, which are not applicable for private limited company. The limited company has to hold meetings and also file regular reports to the Registrar. This is not mandatory with a private limited company.

In terms of directors, the limited company should have three directors whereas private limited companies should have at least two directors.

Summary

  1. A private limited company is one that is owned privately by a group of private individuals.
  2. A limited company is a public limited company that is owned by the general public.
  3. Most of the shareholders in a private limited company will consist of very close groups of relatives or friends. On the other hand, the shareholders in a limited company are the public.
  4. A private limited company cannot list its shares in the stock exchanges, but, a limited company’s shares are listed in the stock exchange and any person can buy and sell it.
  5. If at all a shareholder in a private limited company wants to transfer the shares, he should have the approval of other shareholders.
  6. The limited company has to follow certain stringent rules, which are not applicable for private limited company.


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1 Comment

  1. A private limited company is one that is owned privately by a group of private individuals. A limited company is a public limited company that is owned by the general public.

    I found this very confusing, as this paragraph has given me the impression that LTD (limited company) is a public limited company, when in fact it is a private limited comapany. A PLC is a public limited company.

    Therefore, it should have gone more like this- A LTD (limited company) is a private limited company is one that is owned privately by a group of private individuals. A PLC is a public limited company that is owned by the general public.

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