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Difference Between PVT. LTD. Company and LTD. Company

PVT. LTD. Company vs LTD. Company

In the corporate world, the abbreviations of “PVT. LTD. company” and “LTD. company” are very familiar. “PVT. LTD. company” stands for “private, limited company” while “LTD. company” as “public, limited company.” From its name, it implies that both type of companies have limited liabilities should there be an internal financial crisis like a bankruptcy. The type of limited company is the primary difference between the two. It also sets the tone for the additional differences.

The private, limited company is a company that is characterized by a smaller and restricted number of shareholders. The ownership of this type of company is in the hands of 2 shareholders (at the minimum) and up to 50 or so as the maximum number. The characters who hold the position of shareholders are often people within the same environment like family, friends, and close associates who know each other in many aspects. This characteristic makes the private limited company as some sort of corporate partnership firm.

Since the private, limited company consists of closely-related people, the shares within the company are also private and transferred within the shareholders. Shares cannot be transferred without another shareholder’s approval and cannot be held in a public medium like the stock exchange. Transactions within the private, limited company are not open to the public and no public offer is made. Though the sale is private and the transaction is not listed on the stock market, there is an existing record, and it is given to the government agency who handles these kinds of affairs. In transferring a share from one shareholder to another, there should be an invitation. The share would be sold privately.

The public, limited company (also known as LTD. company) as its name implies, is open compared to the private, limited company. The shareholders in this type of company vary since it is open for all interested parties Shareholders can start as low as seven members and can reach no limit or definite number.

The shareholders are limited in number, and they also serve on the Board of Directors.
The public character of this type of company makes the trading of shares easier. Shares can be freely traded on the stock exchange without discussion or permission from other or the majority shareholders. This is a testament to how the shares are open to everyone.

In order to start the transfer, there is an open invitation via an advertisement to the public. Since there are many shareholders and interested buyers in a free market, trading occurs frequently, and many shares change hands as well.

Records in the public, limited company are open to scrutiny by its shareholders. The shareholders elect the Board of Directors, but the majority shareholder serves almost as somewhat the owner of the company.

Summary:

1.The difference between the two forms of limited company lies in their nature and character. The private, limited company, as the name implies, is shared by a limited number of shareholders; its transactions are negotiated away from the public, and it usually exists in small companies. On the other hand, the public, limited company is a company that is open to all interested shareholders with much more transparency in transactions, records, and other activities.

2.The shareholders of the private, limited company are usually restricted to family, friends, and other close associates while everyone is invited to be a shareholder of a public, limited company. The maximum number of shareholders is below 100 in a private company whereas there is an unlimited number of shareholders in a public, limited company.

3.There is also a difference in how the shares are transferred from one shareholder to another. Shares in the private company will undergo an approval from all shareholders and an invitation. The transaction is not open for public inspection. All of these are in contrast with the public, limited company where the shares are listed and traded freely in the stock exchange. This can be done with freedom and no advanced notice. The records are also available to view by the public (the shareholders, in this case).

4.Private, limited companies are usually small companies while their counterpart is often associated with big, corporate firms.


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1 Comment

  1. This was very good article. So many people are not familiar with the basic difference of the terms. Getting such an important difference made me doubtless. Such a nice web i ever searched. Many many thanks to its founder and initiater..

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