What Is A Company?
It is an artificial person, identified by law i.e., it comes into existence through a legal process. It can also be defined as an association of people, forming a separate legal entity, having limited liability, perpetual succession and a common seal.
Limited liability – Every member or shareholder of a company has limited liability i.e. None is individually liable to pay off company debts. The personal assets of individuals involved are not at risk in case the company goes bankrupt.
Perpetual succession –A company continues to run even if any of the member, owner or shareholder goes bankrupt, dies, transfers his shares or exits the company by force or at his own will.
Separate legal entity – A company is a separate legal entity which means the company and its member or director are different from each other and the company has its own identity. Because of this feature the company can own, rent, sell, buy, pledge, mortgage, etc. the property whether the property is tangible or intangible.
Broadly classifying, a company can be of two types: ‘Public Limited Company’ or simply ‘Limited’ companies and ‘Private Limited Company’. Both of them can be formed by registering under the Indian Companies Act 2013 or any other previous Act. They are the voluntary associations with differences in their structure, minimum paid-up capital, an invitation to the public, no. of restricting rules etc.
Difference Between Private Limited Company & Public Limited Company
| Features | Public Limited Company | Private Limited Company |
|---|---|---|
Definition | Public company means which are not private limited company | Private limited company which is restrict the right to transfer its shares and except in case of OPC the limit of members is 200 |
Minimum Paid Up Capital | There is no minimum requirement for the capital at the time of registration of company. | There is no minimum requirement for the capital at the time of registration of company. |
Minimum Members Required | Seven | Two |
Maximum Members | No restrictions. It can have an unlimited number of members in its hierarchy. | Restricted by only a maximum 200 member |
Minimum Number Of Directors | Three | Two |
Suffix | "Limited" | "Private Limited" |
Share Issue | A company cannot issue shares to the general public without intimating or without prior approval of existing shareholders, ROC, SEBI, and other relevant authorities | A company cannot issue its shares to the general public at any time during the tenure of the business |
Audit Committee | A public company which are listed has to form an audit committee | Not necessary to form an audit committee |
Liability | The liabilities are always limited which means no member or director shall pay any debt or liability which is owned by the company | The liabilities are always limited which means no member or director shall pay any debt or liability which is owned by the company |
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