DISTINCTION BETWEEN PUBLIC SECTOR UNDERTAKING AND PRIVATE COMPANY

As per the public sector undertakings defined under section 617 of the Companies act clearly points out that “not less than fifty-one percent of [paid up capital] held by Central Government or by State Government or partly by both of them”

But in case of Private Company as defined in section 3 clause (iii) “they prohibit any invitation to the public to subscribe for any of the shares or debentures of the company”

Differences between public company and private company

Minimum Paid-up Capital: A company to be incorporated as a Private Company must have a minimum paid-up capital of Rs. 1, 00,000, whereas a Public Company must have a minimum paid-up capital of Rs. 5, 00,000.

Minimum number of members: Minimum number of members required to form a private company is 2, whereas a Public Company requires atleast 7 members.

Maximum number of members: Maximum number of members in a Private Company is restricted to 50; there is no restriction of maximum number of members in a Public Company.

Transerferability of shares: There is complete restriction on the transferability of the shares of a Private Company through its Articles of Association, whereas there is no restriction on the transferability of the shares of a Public company

Issue of Prospectus: A Private Company is prohibited from inviting the public for subscription of its shares, i.e. a Private Company cannot issue Prospectus, whereas a Public Company is free to invite public for subscription i.e., a Public Company can issue a Prospectus.

OBJECTIVE

By private sector, we mean, economic and social activities undertaken privately by a single individual or group of individuals. They prefer to do business in private sector basically to earn profit.

On the other hand P.S.U. refers to economic and social activities undertaken by public authorities. The enterprises in public company are set up with the main aim of protecting public interest.

CAPITAL

In the private company the capital is raised by owners of the company But in P.S.U the capital is raised from Government through loans, private funds and sometimes sources and public issues

AREA OF OPERATION

The private company operates in all areas But the Public Sector Undertaking operates in basic and with adequate return public utility sectors on investment.

DISTINCTION BETWEEN PUBLIC SECTOR AND JOINT VENTURE

In case of public sector the minimum requirement of the members are 7 but in case of joint venture two persons can form a venture under a contractual obligation to run a short duration business.

In public sector the business is taken in forth in the public interest and all the social and economical activities are made keeping in mind the interest of the public but in case of the joint venture the short duration business is being done with the main aim of earning profit.

Public sectors are owned by shareholders and are beholden to the owners of their stock, overseen by a board of representatives elected by the shareholders, but in case of joint ventures the co-ventures are the owners of the business.

Public sector is governed by Companies Act, but in case of joint venture there is no specific Acts.

FIRM: Any business, such as a sole proprietorship, partnership or corporation.

DISTINCTION BETWEEN PRIVATE LIMITED COMPANY AND PARTNERSHIP FIRM

Registration: The registration of a partnership concern is not compulsory. There are certain privileges given to the registered firms which are denied to unregistered ones. These privileges indirectly encourage registration. In the private limited company registration of a company is compulsory. There are two stages in registering private limited company, the first is ‘Incorporation’ and the second is ‘Commencement of Business’. A private limited company can start business after obtaining certificate of incorporation.

Number of Members: A partnership can be started by at least two persons. The maximum number is ten in case of banking and insurance business and it is twenty for

any other business. In the private limited company there must be at least two persons for starting a private company and maximum number of members can be fifty.

Liability: The liability of partners is unlimited. The partners are jointly and separately responsible for the liabilities of the business. In case of private limited company the liability of shareholders is limited to the value of shares held by them. The members are not personality liable for the obligations of the business.