Limited company

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A limited company is a company in which the liability of members or subscribers of the company is limited to what they have invested or guaranteed to the company. Limited companies may be limited by shares or by guarantee. The former may be further divided into public companies and private companies. Who may become a member of a private limited company is restricted by law and by the company's rules. In contrast, anyone may buy shares in a public limited company.

Limited companies can be found in most countries, although the detailed rules governing them vary widely. It is also common for a distinction to be made between the publicly tradable companies of the plc type (for example, the German Aktiengesellschaft (AG), Czech a.s. and the Spanish, French, Polish and Romanian S.A.), and the "private" types of company (such as the German GmbH, Polish sp. z o.o., the Czech s.r.o. and Slovak s.r.o.)

Kinds[edit]

Private company limited by guarantee[edit]

This is a company that does not have share capital, but is guaranteed by its members, who agree to pay a fixed amount in the event of the company's liquidation. Charitable organisations are often incorporated using this form of limited liability. Another example is the Financial Conduct Authority. In Australia, only an unlisted public company can be limited by guarantee.[1]

Private company limited by shares[edit]

Has shareholders with limited liability and its shares may not be offered to the general public. Shareholders of private companies limited by shares are often bound to offer the shares to their fellow shareholders prior to selling them to a third party.[2]

Public limited company[edit]

A public limited company can be publicly traded on a stock exchange; this is similar to the U.S. Corporation (Corp.) and the German Aktiengesellschaft (AG).

In specific countries[edit]

Australia[edit]

The private company equivalent in Australia is the Proprietary Limited company (Pty. Ltd.) An Australian company with only Limited or Ltd. after its name is a public company, such as a company listed on the ASX (although public companies can be, and often are, unlisted). Australia does not have a direct equivalent to the plc.

A shareholder in a limited company, in the event of its becoming insolvent (equivalent to bankruptcy in the U.S.) would be liable to contribute the amount remaining unpaid on the shares (usually zero, as most shares are issued fully paid). "Paid" here relates to the amount paid to the company for the shares on first issue, and should not be confused with amounts paid by one shareholder to another to transfer ownership of shares between them. A shareholder is thus afforded limited liability.

Canada[edit]

In Canada, a person wishing to register a limited company must file Articles of Incorporation with either their provincial government or the federal government.[3]

India[edit]

In India, the designation "Private Limited" or "Pvt Ltd" is suffixed to all private limited companies, while "Public Limited" is used for a Public limited company. The registration of companies in India is handled by the Ministry of Corporate Affairs, which is charged with administering the Companies Act 2013 and other acts related to the Indian private sector.[4]

South Africa[edit]

In South Africa the term "(Pty) Ltd" is used to refer to a private limited company. Recently all Pty are regulated by the CIPC (Companies and Intellectual Property Commission).[5][6]

United Kingdom[edit]

The registration of companies in the United Kingdom is done through Companies House, which operates offices in London, Cardiff, Edinburgh and Belfast.

Prior to 1 October 2009, the registration of companies in Northern Ireland was the responsibility of the Department of Enterprise, Trade and Investment (a department of the devolved government). On the commencement of the Companies Act 2006, Northern Ireland's previously distinct company law was repealed and the new companies code instituted by that Act was extended to Northern Ireland.

United States[edit]

In the United States the expression corporation is preferred to limited company (because corporations there have limited liability). A "limited liability company" (LLC) is a different entity. However, some states permit corporations to have the designation Ltd.[7] (instead of the usual Inc.) to signify their corporate status.

Zimbabwe[edit]

In Zimbabwe the term "(Pvt) Ltd" refers to a private company limited by share capital. All private entities are regulated by the Registrar of Companies in Harare.

See also[edit]

References[edit]

External links[edit]