Limited Company vs. Private Limited Company

Difference Between Limited Company and Private Limited Company Anyone starting a new business must have the knowledge of…

Difference Between Limited Company and Private Limited Company

Anyone starting a new business must have the knowledge of companies existed in the market. Only then he can succeed in business. You must know the types of companies as well as difference between them. If you have this knowledge, you will be in a better condition to earn maximum. You must analyze pros and cons of each and every company you are going to invest in.

Limited Company

Limited company is a type of company recently introduced in the market and known as limited liability. It has the characteristics of both partnership company and business corporations. It has the greater flexibilities of both. It depends entirely upon the shareholder of the company whether they want it to be simple or complicated one. The partners in the limited company have limited liabilities. In some cases they may have unlimited liability. The laws of limited companies are like that of a partnership firm. But limited company has one disadvantage. The problem arises in the agreement between shareholders.

Private limited company

Private limited company consists of the shareholders who have limited liability. It is a separate legal entity. Its shares are not on offer for general public. The shareholders are allowed to invest a limited amount initially. In private limited company, the investment includes premium paid at the time of the issue of shares and their nominal value. Company’s debts cannot be paid off by the personal assets of the directors and shareholders. Changes in the staff may occur frequently in this type of company. But there is no effect of this on company’s health. Ownership of the company may change also.

Difference between Limited Company and Private Limited Company

Generally a limited company is also called a public limited company. This type of company can further be divided as private sector companies and public sector companies. The basic difference between the two is about the transferability of assets the shareholders and the number of share holders. Private limited company may be started with two shareholder minimum and fifty maximum. On the other hand, to begin with public company may have seven members and maximum number is not limited. Public sector company shares are easily transferable while it is not the case with private limited company. The major difference, thus, lies in the manner these two companies operate in the market.




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