COMPANY FORMATION:

Public Limited Company

Private Limited Company

One Person Company

Limited Liability Partnership

Partnership Firm

Sole Proprietor Firm

PUBLIC LIMITED COMPANY:

A public limited company is a voluntary association of members which is incorporated and, therefore has a
separate legal existence and the liability of members is limited. Its main features are:

The company has a separate legal existence apart from its members who compose it.

Its formation, working and its winding up, in fact, all its activities are strictly governed by laws, rules and
regulations. The Indian Companies Act, 2013 contains the provisions regarding the legal formalities for
setting up of a public limited company. Registrars of Companies (ROC) appointed under the Companies
Act covering the various States and Union Territories are vested with the primary duty of registering
companies floated in the respective states and the Union Territories.

A company must have a minimum of seven members but there is no limit as regards the maximum
number.

The company collects its capital by the sale of its shares and those who buy the shares are called the
members. The amount so collected is called the share capital.

The shares of a company are freely transferable and that too without the prior consent of other
shareholders or without subsequent notice to the company.

The liability of a member of a company is limited to the face value of the shares he owns. Once he has
paid the whole of the face value, he has no obligation to contribute anything to pay off the creditors of
the company.

The shareholders of a company do not have the right to participate in the day-to-day management of the
business of a company. This ensures separation of ownership from management. The power of decision
making in a company is vested in the Board of Directors, and all policy decisions are taken at the Board
level by the majority rule. This ensures a unity of direction in management.

As a company is an independent legal person, its existence is not affected by the death, retirement or
insolvency of any of its shareholders.

Advantages

Continuity of existence

Larger amount of capital

Unity of direction

Efficient management

Limited liability

Disadvantages

Scope for promotional frauds

Undemocratic control

Scope for directors for personal profit

Subjected to strict regulations

Requirement:
http://elagaan.com/business/start/public-limited-company#ixzz3JJxZWJUW
PRIVATE LIMITED COMPANY:
A private limited company is a voluntary association of not less than 2 and not more than 50 members,
whose liability is limited, the transfer of whose shares is limited to its members and who is not allowed to
invite the general public to subscribe to its shares or debentures. Its main features are:-

It has an independent legal existence. The Indian Companies Act, 2013 contains the provisions
regarding the legal formalities for setting up of a private limited company. Registrars of Companies
(ROC) appointed under the Companies Act covering the various States and Union Territories are
vested with the primary duty of registering companies floated in the respective states and the Union
Territories.

It is relatively less burdensome to organize and operate it as it has been exempted from many
regulations and restrictions to which a public limited company is subjected to. Some of them are :-

It need not file a prospectus with the Registrar.

It need not obtain the Certificate for Commencement of business.

It need not hold the statutory general meeting nor need it file the statutory report.

Restrictions placed on the directors of the public limited company do not apply to its directors.

The liability of its members is limited.

The shares allotted to its members are also not freely transferable between them. These companies
are not allowed to invite public to subscribe to its shares and debentures.

It enjoys continuity of existence i.e. it continues to exist even if all its members die or desert it.

Hence, a private limited company is preferred by those who wish to take the advantage of limited liability
but at the same time desire to keep control over the business within a limited circle and maintain the
privacy of their business.
Advantages

Continuity of existence

Limited liability

Less legal restrictions

Disadvantages

Shares are not freely transferable

Not allowed to invite public to subscribe to its shares

Scope for promotional frauds

Undemocratic control

http://business.gov.in/starting_business/org_private_ltd.php
ONE PERSON COMPANY: