Limited company

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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. In a company limited by shares, the liability of members is limited to the unpaid value of shares. In a company limited by guarantee, the liability of owners is limited to such amount as the owners may undertake to contribute to the assets of the company, in the event of being wound up. The former may be further divided in public companies (public limited companies) and private companies (private limited 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), Dutch and Belgian nv, British PLC, Czech a.s., Italian S.p.A., Hungarian Nyrt. and the Spanish, French, Polish, Greek and Romanian S.A.), and the "private" types of companies (such as the German GmbH, Dutch and Belgian bv, Portuguese Lda., British Ltd, Japanese G.K., Polish sp. z o.o., Russian ООО, Ukrainian ТОВ (TOV), the Czech s.r.o., the French s.à r.l., the Italian s.r.l., Romanian s.r.l., Hungarian kft., Bulgarian [1] ДОО (DOO), Slovenian d.o.o., and Slovak s.r.o., in India Pvt Ltd for private company and Ltd for public company, in Singapore Pte Ltd for private company.


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. [2]

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 always bound to offer the shares to their fellow shareholders prior to selling them to a third party.

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


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. 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 Brazil, a limited company is registered as any other type of company. To register it, you must pay an accountant to research the name of your future business to check if it was not already registered, then the accountant contacts the offices responsible for giving you the CNPJ (the national code for company identification), which are the commercial joint of the state and the IRS. After that the Ltda. or Lda. (rarely used) suffixes can be placed after the companies name or with Cia. (abbreviation for companhia, company in Portuguese): [company name] & Cia. Ltda.


In Canada, a person wishing to register a limited company must file Articles of Incorporation with either their provincial government or the federal government. At the time of incorporation, a company must elect to use "Limited" (Ltd.), "Incorporated" (Inc.) or "Corporation" (Corp.) as part of their name. [3]


In Chile, to establish a limited company, there are 2 paths: The first path is to do it through a document in a notarial act, and a publication in the Diario Oficial de la Republica de Chile. The second path is to do it through the Registro de Empresas y Sociedades or also known as "company in a day"; a faster and easier way to create a company. After either of the 2 options, a final registration must be made with the Servicio de Impuestos Internos in order to begin business operations. [4]

For this type of companies, you can choose between a Private limited company (Sociedad de Responsabilidad Limitada, abbreviated SRL, Ltda, or Limitada), Individual Limited Liability Enterprise (Empresa Individual de Responsabilidad Limitada, abbreviated EIRL), Joint-stock company (Sociedad por Acciones, abbreviated SpA), or a S.A. (Sociedad Anónima, abbreviated SA).


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$1,300), 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$6,300), and at least seven members; its name ends "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. [5]

Before 2015, the business organisations that wanted to take up a company as the preferred form of business organisation had to fulfill the requirement of minimum paid-up share capital of not less than 5 lakhs in case of public company and 1 lakh in case of private companies by way of Section 2(71) and 2(68) respectively. However, after in the recent Companies Amendment Act 2015, this requirement is scrapped, and a company can go ahead with its incorporation without fulfilling this criterion.


In Nigeria, there are two types of limited companies namely: a company limited by guarantee and a company limited by shares. The company limited by shares is further divided into two namely a Private limited company (Ltd.) and a Public limited company (Plc.) In Nigeria shareholders of limited companies are only liable for the amount of money they contributed to the company. All Nigerian companies are governed by the Companies and Allied Matters Act (CAMA) 1990 and regulated by the Corporate Affairs Commission (CAC).

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). [6] [7]

Sri Lanka

In Sri Lanka, businesses can be registered as Private Limited Company "(Pvt) Ltd", Public Limited Company "PLC" or under a sole proprietorship. Registering as Private Limited Company will be more secure, and have added benefits. Therefore, you and your company will act as two independent parties; ensuring that your business assets and liabilities will be separate. All companies are registered under the Companies Act, No. 7 of 2007., through the Registrar of Companies, which operates its office in Colombo.

United Kingdom

The registration of companies in the United Kingdom is done through Companies House, which operates offices in London, Cardiff, Edinburgh and Belfast. Publicly-traded limited company have names ending in 'Plc.'

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). With the enactment 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, corporations have limited liability, and the expression corporation is preferred to limited company. A "limited liability company" (LLC) is a different entity. However, some states permit corporations to have the designation Ltd. [8] (instead of the usual Inc.) to signify their corporate status. A corporation must file annual corporate tax returns with the Internal Revenue Service.


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

Related Research Articles

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A public limited company is a type of public company under United Kingdom company law, some Commonwealth jurisdictions, and the Republic of Ireland. It is a limited liability company whose shares may be freely sold and traded to the public, with a minimum share capital of £50,000 and usually with the letters PLC after its name. Similar companies in the United States are called publicly traded companies. Public limited companies will also have a separate legal identity.

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The abbreviation S.A. or SA, for the French Société Anonyme designates a type of limited company in certain countries, most of which have a Romance language as their official language and operates a derivative of the 1804, Napoleonic, civil law. Originally, shareholders could be literally anonymous and collect dividends by surrendering coupons attached to their share certificates. Dividends were paid to whomever held the certificate. Since share certificates could be transferred privately, corporate management would not necessarily know who owned its shares – nor did anyone but the holders.

<span class="mw-page-title-main">Joint-stock company</span> Business entity owned by shareholders

A joint-stock company is a business entity in which shares of the company's stock can be bought and sold by shareholders. Each shareholder owns company stock in proportion, evidenced by their shares. Shareholders are able to transfer their shares to others without any effects to the continued existence of the company.

<span class="mw-page-title-main">Incorporation (business)</span> Legal process to create a new corporation

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<span class="mw-page-title-main">Private limited company</span> Type of company used in many jurisdictions

A private limited company is any type of business entity in "private" ownership used in many jurisdictions, in contrast to a publicly listed company, with some differences from country to country. Examples include the LLC in the United States, private company limited by shares in the United Kingdom, GmbH in Germany and Austria, Besloten vennootschap in The Netherlands, société à responsabilité limitée in France, and sociedad de responsabilidad limitada in the Spanish-speaking world. The benefit of having a private limited company is that there is limited liability.

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Corporate law is the body of law governing the rights, relations, and conduct of persons, companies, organizations and businesses. The term refers to the legal practice of law relating to corporations, or to the theory of corporations. Corporate law often describes the law relating to matters which derive directly from the life-cycle of a corporation. It thus encompasses the formation, funding, governance, and death of a corporation.

<i>Naamloze vennootschap</i> Type of business entity under Dutch law

Naamloze vennootschap or Société anonyme (SA) is a type of public company defined by business law in the Netherlands, Belgium, Indonesia, and Suriname. The company is owned by shareholders, and the company's shares are not registered to certain owners, so that they may be traded on the public stock market.

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<span class="mw-page-title-main">Proprietary company</span> Type of business entity

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A société à responsabilité limitée is a form of private company that exists mainly in French-speaking countries, such as France, Luxembourg, Monaco, Algeria, Morocco, Tunisia, Madagascar, Lebanon, Switzerland, and Belgium. The primary purpose of a SARL is to conduct commercial activity.

There are many ways in which a business may be owned under the legal system of England and Wales.

<i>Besloten vennootschap</i> Dutch and Belgian version of a private limited liability company

A besloten vennootschap or société à responsabilité limitée (SRL) is the Dutch and Belgian version of a private limited liability company. The company is owned by shareholders; the company's shares are privately registered and not freely transferable. It is the most common form of limited company in the Netherlands and Belgium.

<span class="mw-page-title-main">United Kingdom company law</span> Law that regulates corporations formed under the Companies Act 2006

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There are three types of business entity in Russia: private limited companies, joint-stock companies, which may either be public, open (OJSC) or private, closed (PJSC), and partnerships.

<span class="mw-page-title-main">Private company limited by shares</span> Type of business entity

A private company limited by shares is a class of private limited company incorporated under the laws of England and Wales, Hong Kong, Northern Ireland, Scotland, certain Commonwealth jurisdictions and the Republic of Ireland. It has shareholders with limited liability and its shares may not be offered to the general public, unlike those of a public limited company.

<span class="mw-page-title-main">South African company law</span> Regulates corporations formed under the Companies Act

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Anguillan company law is primarily codified in three principal statutes:

  1. the International Business Companies Act ;
  2. the Companies Act ; and
  3. the Limited Liability Companies Act.


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