10 key differences between Public, Private and Government company

10 key differences between Public, Private and Government company

Aditya Raj Anand

Sunday, 11 July 2021

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If you are the student of a commerce background then you must hear about the term 'Company' in business studies. Unlikely this term is also more familiar to those who wants to do business. Weather it is small and big. In corporate field, most of the business is defined by the common term 'Company'. If anyone wants to do business then in 90% case it is called 'start a company'.

So here in this post we will going to breakdown the meaning of the term Public company, Government Company and private company. Not only the information but also at least 10 major and minor differences between all of these companies.

While taking about the career. Means what to do next. Then many of the person think about business. But some have not a clear cut idea that how to do business. How to build companies. Which types of company is suitable for us.

So here all your doubts will be clear in the field of knowledge about public, private an government companies.

Apart from the career, a 11th or 12th class students are willing to know about these types of companies. So the information about the types of companies provided below can be used for both the individuals.

What is public company in simple words?

Public company are those company which is started for public benefits. It may be there products or services. In simple words the products and services of public companies serves the huge masses of public. Their products are designed in such a way that it can be needed or beneficial for large number of people.

If you want to understand the definition of public company then just remember one think. The shares of public companies are bought by the public. Means those companies which serves publicly so that their shares and stocks are sold among large number of public.

These are the some points about public company that you must have take a look to understand it well.

• The minimum number of members in public limited company is just 7. You can start a public limited company with just 7 people.

Now, the question is why the minimum of only 7 members in public limited company.

Ans:- The minimum of only 7 members in public limited company because according to the companies act, with only 7 people you can start a public limited company.

• The minimum amount of share in public limited company is just 5 lakhs rupees.
• The maximum limit of members in public limited company is unlimited. Means you can add limitless people in your public limited company. That's why a public limited company sold maximum number of shares and stocks.
• The maximum number of stocks can be sold to the public.

15 plus examples of public companies are as follows:- 

1. Bharat heavy electrical private limited
2. Coal India private limited
3. Bharat petroleum corporation private limited
4. Indian Oil Corporation private limited
5. NTPC Ltd.
6. Punjab National Bank
7. Reliance Jio
8. Tata Motors
9. Videocon D2H
10. Airtel
11. Vodafone
12. Idea
13. Master Card
14. Pepsi
15. Surf Exel
16. Tide
17. Detol
18. Apple
19. Indian overseas Bank
20. SBI BANK

All the above examples of public limited company is listed for stocks and shares. All these companies sells their stocks to the public. And as we know one who sells their stocks to the public called a public limited company. Thant's why all the above are public limited companies in India and in UK.

What is Private Limited Company in simple word?

A private limited company is those companies which has limited number of investers. Means a private limited company can be sold their shares to the limited people. In simple words a private limited company has limited legacy and power.

A private limited company has also limited liability. Means that if a company took loan from the bank and will not able to pay back due to losses then bank will siege only the property of that company not investers or individual owners property.

The benefits of to start a private limited company is only that it has limited liability.

Here the meaning of limited liability in private limited company is, suppose a person took loan of 1 cr from the bank. But due to the losses of that company. It will not able to pay loan back. Then bank will recover their money by only selling the property of that company. Not individual or shareholders property. This is the big benefits of a private limited company.

Even in public limited company liability is also limited. So in public limited company the case are similar to the private limited company.

• The private limited company can be start by only two shareholders and one director.

• There are only 50 shares can be sold in a private limited company.

Please note that if you want to extend the share's buyer then you have to convert your private limited company to a public limited company.

• The maximum number of members in private limited company is only 200 shareholders. But for directors there are only 15.

• The maximum number of shares in private limited company is only 200 because the maximum members is only 200. If anyone wants transfer their shareholders in private limited company then they cannot do. Because of companies act.

15 plus examples of private limited companies are as follows:- 

1. Facebook
2. Yahoo 
3. Twitter
4. Instagram
5. Snapchat
6. Mars
7. TD Bank
8. ICICI BANK
9. Axis Bank
10. HDFC BANK
11. Kotak Mahindra Bank
12. Google
13. Youtube
14. Tik tok
15. MLM companies

Private limited company vs public limited company

These are the following 10 key differences between a private limited company and a public limited company.

• The major difference between a private limited company and a public limited company is only that, the shareholders of a private limited company cannot be transferred. This is due to the companies act.

• A private limited company has only maximum of 200 shareholders. Whereas a public limited company has unlimited shareholders.
• The maximum number of directors in a private limited company has only 15 whereas a public limited company has unlimited.
• A private limited company can be sold only 50 shares whereas a public limited company can be sold more that 50% of shares.
• A private limited company cannot be listed in stock market but a public limited company can be listed in stock market.
• The private limited company can have a under ownership of an individual but this is not in case of public limited company.
• A private limited company is owned by an individual but a public limited company is owned by the public.
• A public limited company can be start with 7 members but a private limited company can be at least 2 people.
• A public limited company can be listed in stock exchange but a private limited company cannot be listed. This is the main difference between a private limited company and a public limited company.
• A public limited company required a certificate for incorporation but a private limited company need not a certificate to start business.

What is government company?

Government company are those company which comes under government liability. In other words a government company runs under the charges of government. All the employees that comes under government company are paid by government funds.

The best example of government company is BSNL. Now, it is planning to sell it to the private limited company.

Examples of government company are:-

• SBI bank
• Indian overseas Bank
• Punjab National Bank
• BSNL
• Some Airport
• Railway