The public and private sectors determine a country’s economy; both are equally important to maintain the balance of the economy.
The GDP of the country is the reflection of economic growth in the country. Thus, it is determined by the public and private sectors. Companies have shares that determine their value in the market.
Companies invest in certain things, probably property, and get profit as the value of a particular property rises.
These companies or firms are directly related to the life of ordinary people; for example, if a person is using toothpaste of a brand and the brand witness loss, then they might increase the price of toothpaste, ultimately affecting the pocket of people.
Almost every developing or developed country also has foreign investments, which certainly falls under the private sector, but the interference and permissions of the government are important.
Key Takeaways
- LTD (Limited) companies are privately-held businesses with limited liability. The company’s finances are separate from the owner’s finances, and the shareholders’ liability is limited to the amount they have invested in the company.
- PLC (Public Limited Company) is a business organization that can sell shares to the public, has a minimum share capital requirement, and is subject to stricter regulations than LTD companies.
- LTD and PLC companies provide limited liability protection for their shareholders, but PLCs can raise capital from the public and must comply with more stringent regulations.
LTD vs. PLC
LTD stands for Limited Partnership and is a company that has one or many private owners, and all the shareholders are private people like co-founders or workers. PLC means Public Limited Company and is an organization that is owned by the government with the general public as shareholders.
Comparison Table
| Parameters of Comparison | LTD | PLC |
|---|---|---|
| Supervision | The private owner (one or many) | Government mostly |
| Transfer of share | Not easily transferred | Easily transferred |
| Shareholders | Private people | Government and general public |
| Profit | Aims their profit | Aims for the public’s profit |
What is LTD?
Ltd signifies private limited company; these types of companies are part of the private sector, and their owners are either sole traders or have partnerships of two or more people.
Ltd companies cannot quote shares in the stock exchange; their claims are sold to their family members, close friends, or anyone they find trustworthy, that too only when shareholders agree to it.
As adding more partners would be a good and hassle-free option. It also limits the liability of the business.
Ltd company is a flexible structure wherein there can be more than one owner; employees can be employed according to the will of the owner; in this sector growth of individuals is more than in the public sector.
As Ltd companies are household businesses, their fall does not affect the public; their motive is profit.
Another important position is of a director responsible for tax filing and all the administrative work; in general, he is an employee.
The Finances of a company are different from its owner. A company’s finance is used to distribute dividends among the shareholders, and the director can take an amount from the company’s finance for salaries and loans.
For setting up a company, there should be a company name and an office address. Moreover, there should be one director and at least one shareholder, paperwork is equally important, and thus, an agreement should be made.
What is PLC?
PLC stands for public limited company. As the name suggests, PLC works under the government. These companies are considered to be part of the public sector.
PLC can quote these shares on the stock exchange. They are adherents of the government and work for the public, not for profit. The buying and selling of shares are done without the owner’s permission.
Working of PLC includes offering shares to the general public, and those buyers will be somewhat liable. Moreover, they cannot be blamed for any loss incurred by the public.
An advantage of PLC over private companies is that the shares are offered to the public, which further attracts individual investors, professional traders, and through mutual funds, hedge funds.
They have more potential to grow than a private company. There are more legal procedures than private which can be considered a disadvantage for people.
Main Differences Between LTD and PLC
- Ltd companies are run under private ownership (one individual or more than one), whereas PLCs are run under the supervision of the government.
- Aim of Ltd companies their profit from the business. On the contrary, PLC aims for a better quality of goods and services.
Last Updated : 11 June, 2023
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Chara Yadav holds MBA in Finance. Her goal is to simplify finance-related topics. She has worked in finance for about 25 years. She has held multiple finance and banking classes for business schools and communities. Read more at her bio page.
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