---
title: "Public vs private limited company"
subject: "Engineering Professional Practice"
chapter: 5
key: "semester_8/engineering_professional_practice:public-vs-private-limited-company"
source: https://www.bctengineer.com/q/semester_8/engineering_professional_practice/public-vs-private-limited-company
site: BCT Engineering
---

# Public vs private limited company

Engineering Professional Practice · Chapter 5: Regulatory Environment

- Asked in: 2069 Bhadra, 5 marks
- Video: [Professional Practices|||CH#04 Company structure||||](https://www.youtube.com/watch?v=Bu4HrzBXxBM) — THE STAR ACADEMY 
- Answer checked by Claude Opus 5.5 (high effort) on 2026-10-14
- Page: https://www.bctengineer.com/q/semester_8/engineering_professional_practice/public-vs-private-limited-company
- Whole chapter: https://www.bctengineer.com/md/semester_8/engineering_professional_practice/chapter-5

## Question

Differentiate between public limited company and 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.

## Answer

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.

## Check yourself

The answer's key points as multiple-choice questions, with the correct option and why.

1. What are the shareholder limits of a private limited company?
   A. At least 7, no maximum
   B. 1 to 101
   C. At least 3
   D. Exactly 50
   Answer: B. Private: minimum 1 and maximum 101; public: at least 7, no maximum. (Key point: Shareholders)

2. Which company can invite the general public to buy shares and debentures?
   A. Private limited company
   B. Public limited company
   C. Both equally
   D. Neither
   Answer: B. Only public companies can raise capital from the public. (Key point: Raising capital)

3. Minimum number of directors?
   A. Public 1, private 3
   B. Public 3, private 1
   C. Both 7
   D. Both 1
   Answer: B. Public companies need at least 3 directors; private at least 1. (Key point: Directors)

4. Why does a public company face more regulation?
   A. It serves many outside shareholders, needing prospectus, annual reports, audit and SEBON rules
   B. It is smaller
   C. It has no board
   D. It cannot transfer shares
   Answer: A. Public participation needs strict disclosure and audit. (Key point: Regulation)

## Related in Engineering Professional Practice

- [IPR, working hours, public vs private company](https://www.bctengineer.com/question.md?key=semester_8%2Fengineering_professional_practice%3Aipr-labour-working-hours-companies) — Engineering Professional Practice, chapter 5
- [Society elements, man-society relation, public vs private](https://www.bctengineer.com/question.md?key=semester_8%2Fengineering_professional_practice%3Asociety-elements-man-relation) — Engineering Professional Practice, chapter 1
- [IPR types and public private partnership](https://www.bctengineer.com/question.md?key=semester_8%2Fengineering_professional_practice%3Aipr-copyright-trademark-patent-ppp) — Engineering Professional Practice, chapter 5

## Related in other subjects

- [Public versus private transportation](https://www.bctengineer.com/question.md?key=semester_6%2Ftransportation_engineering_i%3Apublic-private) — Transportation Engineering I, chapter 1, asked 3×