The Perks of Staying Private

As a matter of fact, out of the total number of 11,89,826 active firms, there were 10,64,522 firms registered as public companies in India as of December 31, 2018, and nearly 11,29,145 entities were enlisted as private companies. Keeping the trend alive, the total number of actively operating companies in India as of March 31, 2021, was 13,44,857, out of which there were 12,33,768 limited private corporations and 65,942 public companies limited by shares.

91.73% of the companies catering to billions of Indians are privately held as of March 2021! This also means that by not investing in the privately held Indian companies, you are losing out on 91.73% of the total available opportunities. It must have led your eyebrows to meet your forehead furrows.

However, why are the leaders ditching the IPO frenzy? What is so beneficial in staying private? Here are a few reasons why,

1. Private enterprises are not subject to the influence of stockholders. The instability and unpredictability that come with being a public company are not present in private enterprises. While many investors accept the peaks and valleys of the stock market as a cost of doing business, they can rapidly become a concern for the firm itself.
2. The government has recently adopted the concept of ‘zero fees’ for Private Limited Companies. The procedures for forming Private Corporations have been simplified as well. In comparison to the establishment of a Private Company, more compliances are necessary for Public Companies, and the method for incorporation is more involved.
3. It is not necessary to get a certificate of beginning from the appropriate authorities. The Registrar of Joint Stock Corporations, on the other hand, requires public limited companies to obtain a certificate of commencement of business.
4. There are no investors from the general populace in a private corporation. As a result, private firms are free from convening a statutory meeting, whereas public corporations are required to hold one. Public corporations must also file a statutory report, although private businesses are not obligated to do so.
5. Control and administration of a private firm are at the disposal of the company’s actual owners. Although the members have participated, the owners retain the majority of control. In a public corporation, one’s shareholding determines one’s power and control.

For many firms, going public used to be a call for the great grand gala! Entrepreneurs fantasize about ringing the bell to begin trading on the National Stock Exchange or the Bombay Stock Exchange’s floor. Taking your company public is an exciting, ambitious, and laudable aim. In recent years, however, there seems to be a movement among businesses to remain private.