A Limited Liability Company (LLC) is a business entity that holds considerable allure in Indonesia. This business entity is divided into two types, namely publicly listed (PLC) and privately held. So, what are the differences between publicly listed and privately held companies? To find out the answer, let’s explore the explanations about the disparities between publicly listed and privately held companies below.
As a newcomer to the business world, it’s sometimes challenging to grasp the differences between publicly listed (PLC) and privately held companies. Although both are popular business entity forms in Indonesia, there are fundamental differences that need to be understood in order to comprehend their legal, ownership, and operational aspects. In this article, we’ll delve into the distinctions between PLCs and privately held companies across several key aspects.
Also read: Individual PT Company Tax: Guide for Independent Entrepreneurs
Difference in Definition
A Publicly Listed Company (PLC) is a legal entity where its shares are traded publicly on the stock market. The shares of this company can be owned by anyone through the stock exchange.
On the other hand, a Privately Held Company (PHC) is a company whose shares are not traded on the open stock market. Its shares are owned by a limited number of shareholders, and the sale of shares is conducted privately.
Legal Basis
The Legal Basis of Publicly Listed Companies is stipulated in the Capital Market Law and overseen by the Financial Services Authority (OJK).
The Legal Basis of Privately Held Companies lies in the Limited Liability Company Law and is generally regulated by the Ministry of Law and Human Rights.
Publicly listed companies have a larger number of shareholders, including institutional investors and the general public.
Privately held companies have a limited number of shareholders, possibly consisting of family members, business associates, or private investors.
Board of Directors
The Board of Directors of publicly listed companies is more open and diversified with members from various backgrounds and experiences.
The Board of Directors of privately held companies often consists of members who have direct involvement in the company, such as owners or family members.
Capital
Publicly listed companies usually have larger capital because it can be obtained from the stock market, financial institutions, and the general public.
The capital of privately held companies is more limited because it depends on contributions from limited shareholders.
Shares of publicly listed companies are traded on the stock exchange, with prices influenced by demand and supply in the market.
Shares of privately held companies are not traded publicly, and their value tends to be based on internal valuation or agreements among shareholders.
Reporting Obligations
Publicly listed companies have stricter reporting obligations to the OJK and the public, including regular financial reports.
Privately held companies have more limited reporting obligations, generally only needing to report to relevant government authorities and shareholders.
General Meetings of Shareholders in publicly listed companies often serve as forums where shareholders from various backgrounds gather to discuss important company issues.
General Meetings of Shareholders in privately held companies tend to be more intimate, involving owners or limited shareholders in crucial decision-making processes.
Understanding the differences between publicly listed and privately held companies is crucial for navigating the business world. In publicly listed companies, transparency and public participation are the main highlights, while privately held companies tend to focus more on ownership and internal control.
Learn more: How to Open a Corporate Bank Account as an Individual in Indonesia: Easy Steps
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Frequently Asked Questions
1. What is a Publicly Listed Company (PLC)? Answer: A Publicly Listed Company (PLC) is a legal entity where its shares are publicly traded on the stock market.
2. What is the fundamental difference between a Publicly Listed Company and a Privately Held Company? Answer: The fundamental difference is that shares of a Publicly Listed Company are traded publicly whereas those of a Privately Held Company are not.
3. Who typically are shareholders in a Publicly Listed Company? Answer: Shareholders of a Publicly Listed Company may involve institutional investors and the general public.
4. What is the legal basis for a Privately Held Company? Answer: The legal basis for a Privately Held Company generally lies in the Limited Liability Company Law and is regulated by the Ministry of Law and Human Rights.
