Private and Public Limited Companies

Explain why would you recommend a Private limited company as a type of business organisation for a new business venture?

The reasons for choosing Pvt. Ltd Company are listed below:

• It can be started with two persons and the maximum no of shareholders is 200 (i.e. more capital)
• If the company is in losses then personal assets of shareholders don’t get any risk of paying liabilities.
• It is asked to pay only corporate tax(i.e. no income tax)
• Loans from banks can be sanctioned easily
• The business can be started as soon as we get the certification. it is not required to call a statutory meeting and to submitstatotory report to the registerar of the companies
• Quorum for meeting is zero.
• It can increase the number of directors with the permission of the government
• It can merge with any companies internationally and expand their business.
• The shares don’t trade on public exchanges and are not issued through ipo
• As the authority is in the hands of owner the Decision making is faster
• Documentation and registration process work is less to start a new business venture
• If we think that the company should be run only by our generations (Family ownership) can choose this type.
• Shareholders don’t have any authority to ask what is going on
• Limited liability
• Transfer of shares cannot be sold to the buyers who threatens them
• It can be run by any other person if there is any unfortunately death or the owner leaves the company. (i.e. company can survive for long term)
• It also provides multiple opportunities and also reduce unemployment

Memorandum of association

• The information about the limitations of powers given to that company reflects on MOA
• It can also acts as the guidelines of the company
• The purpose of the memorandum is to enable the shareholders, creditors and those who deal with the company to know what is permitted range of enterprise

Public company is own by many individuals who have protest company stocks, these stocks are available to general public and can be found on an exchange like newyork stock exchange or NASDAQ .it should file numerous documentswith the securities and exchange commission for shareholders.

A larger research and development areas can be found in public 

A private company is often own by an individual or small group of individuals.

A private company doesnot sell stock to the general public. The stockholders are usually founders, members of their families, key employees in the company. They don’t file documents with the SEC (security and exchange commission)and have no obligation to make their financial information public. They only file certain documents with the state agencies and with the IRS (internal revenue service)