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In a limited company, 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 of the 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), British PLC, Czech a.s., Italian S.p.A. and the Spanish, French, Polish and Romanian S.A.), and the "private" types of company (such as the German GmbH, British Ltd, Polish sp. z o.o., the Czech s.r.o., the Italian s.r.l. and Slovak s.r.o.)
Private company limited by guarantee
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.
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.
Public limited company
In specific countries
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 insolvency in the United Kingdom) 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.
In India, there are three types of limited company: a public limited company, a private limited company, and a one-person company. A company's liability may be limited by shares, in which case the liability of the company's members is limited to the amount of the shares held by them, or it may be limited by guarantee, in which case the liability is limited to a predetermined amount the company's members have agreed to contribute if the company is dissolved with outstanding liabilities. A private limited company is a limited company incorporated under the Companies Act 2013 (or one of its predecessor acts), with a minimum paid-up share capital (if any) of ₹1 lakh (US$1,500), with an article that restricts the transfer of its shares; it may have between two and two hundred members, and its name ends with "Private Limited" (abbreviated Pvt Ltd). A public limited company must have a paid-up share capital of at least ₹5 lakh (US$7,500), and at least seven members; its name ends with "Limited" (abbreviated Ltd). A one-person company (OPC) is a private company with similar proprietorship and privileges to a private limited company, but with fewer requirements; this type of company may have only one director and member.
In South Africa the term "Proprietary Limited", abbreviated "(Pty) Ltd", is used to refer to a private limited company. All South African companies are regulated by the CIPC (Companies and Intellectual Property Commission).
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.
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. (instead of the usual Inc.) to signify their corporate status.
- Company formation (UK)
- Limited liability partnership (LLP)
- Share capital
- Types of business entity
- Unlimited company
- Yūgen gaisha
- "Australian Limited Companies". Retrieved 2010-08-15.[dead link]
- More detailed information on Private Limited Company Retrieved 2013-02-28
- "Companies Act 2013" (PDF).
- http://www.cipc.co.za/products_services/beginners_guide.asp A Beginners Guide to CIPC
- http://www.intergate-immigration.com/private-company-close-corporation.php CC vs PLC
- Driska, Jan. "Delaware LLC".