The document compares private limited and public limited companies under the Companies Act, 2013, highlighting key differences in provisions that apply to each type of entity. Notably, many privileges previously exclusive to private companies have been eliminated, and new compliance requirements have been introduced for both categories. The conclusion suggests that the changes have rendered private companies less advantageous for MSMEs, while also introducing the limited liability partnership as an alternative business structure.

1. AGARWAL & JAIN
Chartered Accountants
_____________________________________________________________________________________
1. HEADING: Comparision between a Private Limited and Public Limited Company as per
Companies Act, 2013.
2. BRIEF: Major differences between a Private Company and a Public Company as per various
provisions contained in the Companies Act, 2013, relevant rules.
a. INTRODUCTION: The Companies Act of 2013 has done away with the relaxation to
private companies in several provisions. The concept of “not applicable to private
company” is no more in existence in the Act of 2013. Such a move in the Companies Act
of 2013 has taken away certain privileges enjoyed by private companies. The privileges
are of two types. One is for the directors and to their interest and the second one is for the
private company itself. The Directors were hitherto enjoying certain pleasure from the
application of certain provisions are now withdrawn. Further, the Companies Act, 2013
have mandated certain new requirement like that of internal audit to both public and
private companies.
b. MAIN BODY: Statement showing Some key points of differences in applicability of
various provisions of the Companies Act, 2013 between a Public Limited Company and a
Private Limited Company:
SR
NO
SECT
-ION
BRIEF
DESCRIPTION
PRIVATE COMPANY PUBLIC COMPANY
1 2 Meaning
Minimum Capital : Rs. 100000
Right to transfer the shares:
Restricted
Minimum Capital : Rs. 500000
Subsidiary of a Public Co. is
deemed to be a public Co.
2 2 Small Company
If Paid-up Share Capital does not
exceed Rs. 50 Lakhs and
Turnover as per Last Audited
accounts does not exceed Rs. 2
Crore
Not Applicable
2 3
Minimum Members
Required
2 (Two),
Maximum 200 (Two Hundred)
7 (Seven)
3 4 Name of the Company “Private Limited” as Last Word “Public Limited” as Last Word
4 5
Provision of
entrenchment in the
Articles
To be agreed and approved by all
the members
To be agreed and approved through
a Special Resolution
845, Ajanta Shopping Centre,
RingRoad, Surat, Gujarat–395002.
E-Mail: patners@agarwaljain.in
Visit us at: www.agarwaljain.in
Tel.: 0261-3314545

2. 5 23 Issue of Securities
By way of Right Issue or Bonus
Issue
Through Private Placement
To Public through Prospectus
(“Public Offer”)
By way of Right Issue or Bonus
Issue
Through Private Placement
6 29
Public Offer to be in
Dematerialised Form
Not Applicable
In case of public offer of securities,
the securities have to be in
Dematerialised Form
7 40
Securities in Public
Offer to be listed in
Stock exchanges
Not Applicable
Securities offered in Public Offer,to
be listed in Recognised Stock
Exchanges
8 67
Purchase / Loan for
Purchase of Own
Shares
Not allowed to Purchase its own
Shares
Not allowed to Purchase its own
Shares;
No Financial assistance to be given
to purchase its own shares
9 73
Acceptance of
Deposits
Not allowed to accept deposit
Allowed if Paid up share capital is
Rs. 100 Crore or more or
Turnover of Rs. 500 Crore or more
10 103 Quorum of Meetings Two members personally present
Five in case of Members upto 1000;
Fifteen in case of Members more
than 1000, upto 5000;
Thirty in case of Members exceed
5000.
11 138 Internal Audit
Applicable in case of :
1. Turnover >= Rs. 200 Crore in
preceding financial year,
OR
2. Loans from bank or NBFCs
>= Rs. 100 Crore in preceding
financial year
Applicable in case of :
1. Paid Up Capital >= Rs. 50 Crore in
the preceding financial year, OR
2. Turnover >= Rs. 200 Crore in
preceding financial year,
OR
3. Loans from bank or NBFCs >= Rs.
100 Crore in preceding financial
year, OR
4. Public Deposit >= Rs. 25 Crore in
preceding financial year
12
134
(3)(p)
Annual Evaluation in
the Board’s Report
Not Applicable
If Paid up share capital is Rs. 25
Crore or more, the details of annual
evaluation in the Board’s Report
13
139
(2)
Rotation of Auditor
Applicable in case of Paid up
Capital is Rs. 20 Crore or more
Applicable in case of Paid up
Capital is Rs. 10 Crore or more
14 149
No. of Directors and
Independent Directors
2 (Two);
Not required to appoint
independent director
3 (Three); and
In case of Listed Companies, at least
One-Third as independent directors

3. 15 152
Retirement by rotation
- Appointment of
Director
Not Applicable
At least two-third of total no. of
directors be liable to retire by
rotation and eligible of being re-
appointed in AGM
16 190
Contract of
Employment with
Managing Director /
Whole Time Director
Not Required (Optional) Compulsorily Required
17 197
Restriction on
Managerial
Remuneration
No restriction on amount of
managerial remuneration
Managerial Remuneration is:
Restricted to 11% of Net profit
(subject to conditions); OR
at least Rs. 30 lakh p.a. depending
upon paid up capital
c. Conclusion: From the above discussion, it is evident that many provisions as applicable
to Public Limited Companies are now made applicable to Private Limited Companies as
well under the Companies Act, 2013. For MSMEs, earlier the Private Companies were
preferable mode of entity for running business operations. However,with the new
Companies Act,2013, some major advantages enjoyed by Private Companies have been
withdrawn. With the introduction of Limited Liability Partnership, a new form of entity is
introduced through which the benefits of legal entity can be reaped without being tied up
with the much legal formalities as enumerated in the case of Private / Public Limited
Companies.
3. Details of the Author:
a. NAME: FCA Sachin D Jain
b. ADDRESS: 845, 8th
Floor, Ajanta Shopping Centre, Ring Road, Surat, Gujarat – 395002
c. PHOTOGRAPH:Attached herewith.
4. Consent for exclusive publication: This article is exclusive sent to taxguru.in for its publication
on its website.