Limited company

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.)

Kinds

Private company limited by guarantee

Main article: 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.

Private company limited by shares

Main article: Private company limited by shares

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

Main article: Public limited company

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

Australia

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.

Canada

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

India

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$7,400), 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.

South Africa

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).

United Kingdom

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

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.

Zimbabwe

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

• Company formation (UK)
• Limited liability partnership (LLP)
• Share capital
• Types of business entity
• Unlimited company
• Yūgen gaisha

External links

• Limited liability company UK Business Link