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
Guarantee is a legal term more comprehensive and of higher import than either warranty or "security". It most commonly designates a private transaction by means of which one person, to obtain some trust, confidence or credit for another, engages ...
. 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
British may refer to:
Peoples, culture, and language
* British people, nationals or natives of the United Kingdom, British Overseas Territories, and Crown Dependencies.
** Britishness, the British identity and common culture
* British English, ...
PLC,
Czech
Czech may refer to:
* Anything from or related to the Czech Republic, a country in Europe
** Czech language
** Czechs, the people of the area
** Czech culture
** Czech cuisine
* One of three mythical brothers, Lech, Czech, and Rus'
Places
* Czech, ...
a.s.,
Italian
Italian(s) may refer to:
* Anything of, from, or related to the people of Italy over the centuries
** Italians, an ethnic group or simply a citizen of the Italian Republic or Italian Kingdom
** Italian language, a Romance language
*** Regional Ita ...
S.p.A.,
Hungarian Nyrt. and the
Spanish
Spanish might refer to:
* Items from or related to Spain:
**Spaniards are a nation and ethnic group indigenous to Spain
**Spanish language, spoken in Spain and many Latin American countries
**Spanish cuisine
Other places
* Spanish, Ontario, Can ...
,
French,
Polish,
Greek
Greek may refer to:
Greece
Anything of, from, or related to Greece, a country in Southern Europe:
*Greeks, an ethnic group.
*Greek language, a branch of the Indo-European language family.
**Proto-Greek language, the assumed last common ancestor ...
and
Romanian
S.A.), and the "
private" types of company (such as the German
GmbH, Dutch and Belgian
bv,
Portuguese
Portuguese may refer to:
* anything of, from, or related to the country and nation of Portugal
** Portuguese cuisine, traditional foods
** Portuguese language, a Romance language
*** Portuguese dialects, variants of the Portuguese language
** Portu ...
Lda., British
Ltd., Japanese
K.K., Polish
sp. z o.o., Russian ООО,
Ukrainian ТОВ (TOV), the Czech
s.r.o., the French
s.a.r.l., the Italian
s.r.l., Romanian
s.r.l., Hungarian
kft., Macedonian ДОО (DOO), Slovenian d.o.o., and
Slovak s.r.o.
Types
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
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.
The United States of America (U.S.A. or USA), commonly known as the United States (U.S. or US) or America, is a country primarily located in North America. It consists of 50 states, a federal district, five major unincorporated territori ...
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. 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.
Brazil
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 wasn't 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):
ompany name& Cia. Ltda.
Canada
In Canada, a person wishing to register a limited company must file ''
Articles of Incorporation
Article often refers to:
* Article (grammar), a grammatical element used to indicate definiteness or indefiniteness
* Article (publishing), a piece of nonfictional prose that is an independent part of a publication
Article may also refer to:
...
'' 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.
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 , 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 , 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.
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 recen
Companies Amendment Act 2015 this requirement is scrapped, and a company can go ahead with its incorporation without fulfilling this criterion.
Nigeria
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).
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
The United Kingdom of Great Britain and Northern Ireland, commonly known as the United Kingdom (UK) or Britain, is a country in Europe, off the north-western coast of the European mainland, continental mainland. It comprises England, Scotlan ...
is done through
Companies House
Companies House is the executive agency of the company registrars of the United Kingdom, falling under the remit of the Department for Business, Energy and Industrial Strategy. All forms of companies (as permitted by the Companies Act) are in ...
, which operates offices in
London
London is the capital and List of urban areas in the United Kingdom, largest city of England and the United Kingdom, with a population of just under 9 million. It stands on the River Thames in south-east England at the head of a estuary dow ...
,
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
The Department for the Economy (DfE, ga, An Roinn Geilleagair) is a devolved Northern Ireland government department in the Northern Ireland Executive. The minister with overall responsibility for the department is the Minister for the Econo ...
(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 United States of America (U.S.A. or USA), commonly known as the United States (U.S. or US) or America, is a country primarily located in North America. It consists of 50 states, a federal district, five major unincorporated territori ...
,
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.''
(instead of the usual ''Inc.'') to signify their corporate status. A limited company must file annual tax returns ("corporation" tax returns) with the
Securities and Exchange Commission.
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
Company formation is the term for the process of incorporation of a business in the UK. It is also sometimes referred to as company registration. These terms are both also used when incorporating a business in the Republic of Ireland. Under UK c ...
(UK)
*
Limited liability partnership (LLP)
*
Share capital
*
Types of business entity
A business entity is an entity that is formed and administered as per corporate law in order to engage in business activities, charitable work, or other activities allowable. Most often, business entities are formed to sell a product or a servi ...
*
Unlimited company
An unlimited company or private unlimited company is a hybrid company ( corporation) incorporated with or without a share capital (and similar to its limited company counterpart) but where the legal liability of the members or shareholders is ...
*
Yūgen gaisha
*
Privately held company
References
External links
Limited liability companyUK
Business Link
Business Link was a government-funded business advice and guidance service established in England in 1992. It consisted of an online portal managed by HM Revenue and Customs (HMRC) and a national telephone helpline.
The service's network of ...
{{Authority control
Legal entities
Types of business entity
ja:株式会社