Difference Between Private and Public Company

Discover differences between private and public limited companies, benefits and drawbacks, and steps for a private company to go public.
Check Eligibility
Business Loan
Check Eligibility
3 min
13 January 2026

A private company is a business entity owned by a small group of investors or shareholders and does not trade its shares publicly. Conversely, a public company offers its shares to the general public through a stock exchange, allowing for broader ownership and typically greater access to capital. Let’s delve deeper into the differences between these two types of companies.

What is a Public Limited Company?

A public limited company is a type of business entity that is allowed to offer its shares to the public. Governed under the Companies Act, 2013 in India, this form of company must have a minimum of three directors and seven shareholders, with no upper limit on the number of shareholders. Public limited companies must also maintain a minimum paid-up capital of INR 5 lakhs or such higher amount as prescribed. The shares of a public limited company can be traded on a stock exchange and bought by the general public. The process of converting private company to public limited company can be complex and requires strict adherence to regulatory guidelines. This structure is favored by businesses seeking to raise capital from the public through the sale of shares. Key features include greater transparency, strict regulatory compliances, and increased public scrutiny, which often enhances credibility and opportunities for growth.

What is a Private Limited Company?

A private limited company is a type of business entity held privately by small groups of people. It is registered for pre-defined objects and owned by a group of stakeholders known as shareholders. Under the Companies Act, 2013, a private limited company must have a minimum of two directors and can have a maximum of two hundred shareholders. The company restricts the right to transfer its shares between its shareholders and does not allow public trading of shares. Typically, private limited companies are favored for small to medium-sized businesses due to their operational flexibility, limited liability of the members, fewer compliance burdens compared to public limited companies, and substantial control over the business.

Business Loan
Business Loan

Difference between Private and Public Company

Private and public companies are different in many ways. The table below shows the main differences between them:

Basis

Public Company

Private Company

Meaning

Listed on the stock exchange; anyone can buy or sell its shares.

Not listed on the stock exchange; shares are owned privately.

Number of Members

Minimum 7 members; no maximum limit.

Minimum 2 and maximum 200 members.

Articles of Association

Can make its own rules or follow the standard format (Schedule F).

Must create its own Articles of Association (company rules).

Transfer of Shares

Shares can be freely bought or sold on the stock exchange.

Share transfers are restricted, as per company rules.

Public Subscriptions

Can invite the public to buy shares or bonds.

Not allowed to offer shares or bonds to the public.

Issuing a Prospectus

Can issue a prospectus or choose private placement.

Not allowed to issue a prospectus.

Minimum Allotment Amount

Must get a minimum number of subscriptions before issuing shares.

Can issue shares without meeting a minimum subscription.

Starting a Business

Needs a certificate of commencement to start business.

Can start business as soon as it is registered.

Appointment of Directors

One director can be appointed by one resolution.

Two or more directors can be appointed with one resolution.

Statutory Meeting

Compulsory.

Not compulsory.

Suffix in Name

Must have “Limited” at the end of the company name.

Must have “Private Limited” at the end of the company name.

Disclosing Reports

Must share quarterly and yearly financial reports with the public.

Not required to publicly share financial results.


Advantages and disadvantages of private and public companies

Company Type

Advantages

Disadvantages

Private

Offers greater control and privacy, simpler compliance requirements, faster decision-making, and confidentiality of financial information.

Limited access to capital, lower liquidity for investors’ shares, and potential constraints on growth.

Public

Provides access to larger pools of capital, improved credibility and market visibility, higher liquidity for shareholders, and the ability to attract top talent through stock options.

Reduced control for founders, heavier regulatory and compliance obligations, greater public scrutiny, and exposure to market volatility.


Is it possible for a private company to go public?

Yes, a private company can be converted into a public company through a legal procedure. This involves obtaining shareholder approval via a special resolution and submitting the required documents to the relevant authorities. The company’s Memorandum and Articles of Association must be amended to remove restrictions on share transfer and delete the word “Private” from its name. Companies usually opt for this conversion to raise funds from the public, enhance market presence, and boost credibility.

Conclusion

Understanding the distinction between a public limited company and a private limited company is crucial for entrepreneurs and business owners to choose the most appropriate structure based on their capital needs, business scale, and management styles. While a public limited company offers the advantage of raising funds from the public and ensures greater transparency, a private limited company offers simplicity and less stringent regulatory controls, making it suitable for smaller operations. Businesses must also account for company registration fees in India when selecting their entity type. Both entities provide limited liability protection, but the choice depends significantly on the company's vision for growth, the need for capital, and the desired level of regulatory oversight. Entrepreneurs considering expansion may start as private limited companies and transition to public as they grow and require more capital, potentially facilitated through business loans and public investment. Ultimately, the decision should align with long-term business goals and operational capacities.

How to get Business Loan for Public or Private Limited Company

  • Understanding how much money the company needs and deciding the right loan amount.
  • Checking the company’s financial records, such as profit and loss statements, balance sheets, and cash flow reports.
  • Preparing a list of important documents needed for the loan application, like company registration papers, tax returns, and bank statements.
  • Explaining why each document is important and how it helps in getting the loan approved.

Helpful resources and tips for business loan borrowers

Types of business loan

Business Loan Interest Rates

Business Loan Eligibility

Business Loan EMI Calculator

Unsecured Business Loan

How to Apply for Business Loan

Working Capital Loan

MSME Loan

Mudra Loan

Machinery Loan

Personal Loan for Self Employed

Commercial Loan

Frequently asked questions

What is the maximum limit on members of a private and public company?

A public limited company requires a minimum of 7 members to be formed, with no upper limit on the maximum number of members.

In contrast, a private limited company must have at least 2 members, and the total number of members cannot exceed 200.

What are the features of public and private companies?

Private companies are easier to establish and face fewer regulatory obligations, making them ideal for startups and businesses with foreign ownership. In comparison, public companies, which can raise funds from the general public, are better suited for large-scale projects that need substantial investment.

Show More Show Less

Bajaj Finserv app for all your financial needs and goals

Trusted by 50 million+ customers in India, Bajaj Finserv App is a one-stop solution for all your financial needs and goals.

You can use the Bajaj Finserv App to:

  • Apply for loans online, such as Instant Personal Loan, Home Loan, Business Loan, Gold Loan, and more.
  • Invest in fixed deposits and mutual funds on the app.
  • Choose from multiple insurance for your health, motor and even pocket insurance, from various insurance providers.
  • Pay and manage your bills and recharges using the BBPS platform. Use Bajaj Pay and Bajaj Wallet for quick and simple money transfers and transactions.
  • Apply for Insta EMI Card and get a pre-qualified limit on the app. Explore over 1 million products on the app that can be purchased from a partner store on Easy EMIs.
  • Shop from over 100+ brand partners that offer a diverse range of products and services.
  • Use specialised tools like EMI calculators, SIP Calculators
  • Check your credit score, download loan statements and even get quick customer support—all on the app.

Download the Bajaj Finserv App today and experience the convenience of managing your finances on one app.

Do more with the Bajaj Finserv App!

UPI, Wallet, Loans, Investments, Cards, Shopping and more

GET THE APP

Disclaimer

1. Bajaj Finance Limited (“BFL”) is a Non-Banking Finance Company (NBFC) and Prepaid Payment Instrument Issuer offering financial services viz., loans, deposits, Bajaj Pay Wallet, Bajaj Pay UPI, bill payments and third-party wealth management products. The details mentioned in the respective product/ service document shall prevail in case of any inconsistency with respect to the information referring to BFL products and services on this page.

2. All other information, such as, the images, facts, statistics etc. (“information”) that are in addition to the details mentioned in the BFL’s product/ service document and which are being displayed on this page only depicts the summary of the information sourced from the public domain. The said information is neither owned by BFL nor it is to the exclusive knowledge of BFL. There may be inadvertent inaccuracies or typographical errors or delays in updating the said information. Hence, users are advised to independently exercise diligence by verifying complete information, including by consulting experts, if any. Users shall be the sole owner of the decision taken, if any, about suitability of the same.
For customer support, call Personal Loan IVR: 7757 000 000

Related videos