In the Public sector, the government shares half or even more of the profit the company owns. To say they are government-controlled companies. An example includes –
- State Bank of India
- India Oil Corporation
A Public limited company is a private company. A single or group of individuals runs the business.
Examples include – Reliance on Industry
- The public sector comprises government-owned and operated organizations that provide goods and services for public benefit. In contrast, public limited companies are privately owned entities that issue shares to the public and are traded on stock exchanges.
- Public sector organizations are funded by tax revenue and focus on healthcare, education, and infrastructure, whereas public limited companies seek to generate profits for their shareholders.
- Public sector organizations’ management is government officials’ responsibility, whereas public limited companies are managed by a board of directors and executive officers who are accountable to shareholders.
Public Sector vs Public Limited Company
The difference between the Public sector and a Public Limited Company is that the government controls a Public sector company, and shareholders handle a public limited.
Both these terms are not clear to most people and often lead to a mistake in choosing the right path for them.
The public sector has fewer shareholders, whereas Public Limited has more than fifty shareholders. However, there is a lot of difference between these two.
|Parameter of Comparison||Public Sector||Public Limited|
|Character||The state or central government controls public sector companies.||An independent group of people handles private limited companies.|
|Shareholders||The number of shareholders is less than two.||Here the number of shareholders exceeds more than fifty.|
|Meeting||The public sector must call a statutory general meeting of members.||The public limited company doesn’t need to call a statutory general meeting of members.|
|Share market||A public sector company is not listed in the share market.||A public limited company is listed in the share market and requires an IPO.|
|Commencement||Public sector companies require a certificate for commencement after incorporation.||Public limited companies can immediately start their business as rules are up to their hand.|
What is Public Sector Company?
The state controls a Public sector company, central government, or local government. This type of company mainly looks to benefit people’s life with less importance on profit.
They are large businesses with the same level of liability.
Advantages of a public sector company:
Protection of public interest: Unlike the PLC, the public sector companies formulate policies for the general welfare.
Policies are subjected to minstrel review and parliamentary scrutiny. Thus public sector companies are always the priority of customers.
Instant work: As bureaucracy and red-tapism is reduced to a considerable extent, speedier decisions can be taken. Thus it has better management.
Disadvantages of public sector companies:
Political interference: Though autonomy functions still, the strong influence of party and politics cannot be avoided entirely. They are not allowed to set their price even if there are changes in the global market.
Financial problem: When a public sector company incurs enormous losses, the government makes subsidies to cope. These subsidies regularly can affect the economy of the country.
What is Public Limited Company?
Shareholders with no governmental control form a public limited company. It is a small business in which the liability is limited.
Limited liability encourages investors to invest, as they know they lose or earn only the part they share. Its shares are bought and sold on the Stock Exchange.
Advantages of a public limited company:
Capital: The main advantage of a public limited company is that large amounts of money can be raised quickly.
Bulk buying: A public limited company is highly benefited from bulk buying. They can invest in different fields and share the profit with the shareholders.
Disadvantages of public limited company:
Takeover bid: The main disadvantage of a public limited company is that the business can be lost from the hands of the original shareholder if large quantities of shareholders are purchased. This economics: the industry may become too large to handle. As a result, annual accounts have to be opened for public inspection.
Main Differences Between Public Sector and Public Limited Company
The key differences between them are listed below:
- The government controls a public sector company with a limited number of shareholders, whereas the public limited company is an independent private with many shareholders.
- A public sector company is not listed in the share market, but a public limited company is listed in the share market and requires an IPO.
- Public sector companies mainly think of customer welfare and less about financial profit. The public limited company assumes more about profit and share and less about the general welfare.
- A public sector company is a significant business handled with proper guidance by ministries and parliament. Still, a Public limited company is a small business controlled by the director and follows the rule of liability.
- Ownership can never be taken in public sector companies. Public limited fears losing ownership by a takeover bid in the stock exchange market.
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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.