- 2069 Bhadra · 5 marks
Public vs private limited company
Short answer
Public companies can raise capital from the public, need at least 7 shareholders and no maximum, face stricter disclosure, and end with Ltd.; private companies have 1 to 101 shareholders, cannot invite the public, restrict share transfer, and end with Pvt. Ltd. Private firms are simpler and cheaper to run.
Differentiate between public limited company and private limited company.
Both are companies registered under the Companies Act 2063, which are separate legal entities with limited liability. They differ in size, ownership and public participation.
| Basis | Public limited company | Private limited company |
|---|---|---|
| Meaning | Company that can raise capital from the general public | Company owned by a few, closed to the public |
| Minimum shareholders | At least 7 (as per the Act) | 1 |
| Maximum shareholders | No limit | 101 |
| Invitation for shares | Can offer shares and debentures to the public | Cannot invite public |
| Transfer of shares | Freely transferable; can be listed on the stock exchange | Restricted by articles and need consent |
| Number of directors | At least 3 | At least 1 |
| Capital | Large; minimum capital rules apply | Small, any capital |
| Disclosure and audit | Strict: prospectus, annual reports, audit, SEBON rules | Less strict |
| Management | Board accountable to many shareholders | Often owners manage directly |
| Name ending | Ltd. | Pvt. Ltd. |
| Examples | Nepal Telecom, Nabil Bank | Small family or tech firms |
| Risk and control | Control spread; more regulation | Easier control; less regulation |
A private company is simpler and cheaper to run, while a public company can mobilise large capital but faces more regulation.
✓ Answer checked by Claude Opus 5.5 (high effort)
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