Different between LLP vs Public limited company Fully explain
Guys, we all already know about LLP and public limited companies. Today we will tell you which is better between LLP and Public Limited Company. And today’s bonus tips are which business LLP should be started and which business should be started by a public limited company.
If you don’t know much about LLPs and public limited companies, you can check out the previous posts on this website.
Shareholder or member
In case of limited liability partnership, the minimum shareholders can be two and there is no maximum limit. And in the case of a public limited company the minimum director is 3. And with that the minimum shareholder is 7, but the maximum shareholder has no limit here either. Because the general public can have a large number of shareholders here, if the company is registered on the stock exchange.
Compliance (Tax and audit)
Limited liability partnership tax is a little less, if the turnover of a company registered with LLP is more than 40 lakhs, it has to be audited. And even if the capital is more than 25 lakhs, it becomes compulsory for them to be audited. The tax of a private limited company is much higher but even if the turnover or capital loss of the company is running, the audited becomes compulsory. And in the case of public limited companies, the advantages of LLP are much more in the case of compliances.
PLC Compliances are more for some of these reasons
- Annual General Meeting
- Financial Statements
- Annual Return
- Income Tax Returns
- Secretarial Audit Report
- Compliances under all Rules and Regulations associated with SEBI
Liability of partnership
Limited liability partnership and public limited company are both liability limited. This means that if a loan is taken in the name of the company and the loan cannot be repaid by the company, then only the bank can repay the bank’s money by auctioning the company’s assets, no shareholder can sell personal assets, except the company’s assets. With this there is no joint liability.
Example of joint liability: In this LLP and public limited company registered companies, if a shareholder has 40% share, his liability is not 70% or it can be said that the shareholder will have the same liability as the share percentage.
Limited liability Partnership (LLP)
There is only one agreement in LLB and that is exactly how the company will run, here you do not have to do as much as in a public limited company.
Public Limited Company(PLC)
In a public limited company you have to submit a lot of documents, here you need documents like Memorandum of Association (MoA), articles of association (AoA, called articles of incorporation in some jurisdictions) etc., and another is shareholder agreement where shareholder key What a responsibility.
Owner and management
In case of limited liability partnership, owner and management are the same. But in the case of public limited companies, owner and management are different. If Owners are A, B, C then Management is X, Y, Z. A public limited company is a proprietary structure organization. For any investor invests in a public limited company.
If you ever need to invest in the future, the limited liability partnership will not be able to register on the stock exchange. But public limited companies can register on the stock exchange. This is a benefit in the case of a public limited company.
Those who have started or will start a new business now think that if they want to register their business then they can register LLP. Because they are starting a new business and if they can’t afford high compliances, it is better to register their LLP, because in the case of a public limited company, there are a lot of compliances and there are a lot of rules that cannot be handled in a normal business. So in our opinion they should register LLP without registering a public limited company.
A public limited company should register a business or company that has reached a scale. This means that a private limited company or LLP registered company should be transferred to a public limited company only when it reaches a certain scale.
Because whenever a company reaches a big position, it needs to invest in that company and if that company wants to register on the stock exchange, it has to transfer to a public limited company.
- What is a Private limited Company | Full Details
- Limited Liability Partnership(LLP): Basic Guide
- Public limited company Definition – Full Explain
- One Person Company (OPC): Definition, Features, Formation etc.
You can contact us if you want to know more about Limited Liability Partnership and Public Limited Company.