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.