Limited Company vs Private Limited Company
Before anyone commences a business, it is always recommended to know the types of business companies that can operate in the market. Once he knows about the types, he will be in a better position to analyze the advantages and disadvantages of the options that are available to him. Later, he can opt for the company which suits his condition and requirement.
Limited company is also known as limited liability company and has been recently introduced in the market. Limited company is a fine blend of partnership company and business corporations and ensures greater flexibility by merging the benefits of both types of business entities. It is entirely dependent on the shareholder to make the company simple or a complicated one. The partners involved in the limited company have either limited liability or in some cases unlimited liability. Tax laws are similar to the partnership firm. The major advantage of the limited company is that the formation is pretty flexible and thus it can be made to run several types of businesses. The basic and the critical part in limited company is the agreement between the members and should be done with great care.
Private limited company
Private limited company is a separate legal entity and comprise of shareholders who have limited liability. Furthermore, the shares of the company can never be offered to the general public. The word limited liability means that the shareholders’ liability is only limited to the amount initially invested. The original investment includes the shares’ nominal value and the premium paid at the time of issuance of shares. The personal assets of the shareholders and directors are all safe and cannot be taken in order to pay off the company’s debts. The private limited company continues to operate in the market despite any changes in the staff, ownership or overall employment of the company. The company will use its name for all legal matters and not the names of the directors or owners in any case. It is the company which takes legal actions and enters in some legal contract.
Difference between Limited Company and Private Limited Company
In general, limited company is also known as a public limited company and the features of the private limited company are stated above. The public limited company is further classified as under private sector and the public sector company. The major and the most prominent difference between the limited and private limited company is the number of shareholders in the organization and the transferability of shares. A private limited company can be commenced with mere two share holders and the maximum limit of shareholders is fifty. The case of public company is slightly different. The minimum numbers of shareholders are seven and there is no upper limit of the number of shareholders. Shares can be easily transferred in the public sector company whereas the case of private limited company is totally opposite. There are some stringent requirements which hold for the public limited company and not for the private ones.
The major difference lies in these two types of companies is how they operate in the market and how their shares are distributed. The public limited companies are driven by government whereas the private limited companies are run by the shareholders from the general public.