Business Ownership - Private limited company (Ltd) 1.5.4
Private limited company - (Incorporated) A business that is owned by its shareholders known to the company, often family and friends, run by directors and where
the liability of shareholders for the debts of the company is limited.
Shares cannot be sold openly on the stock exchange, only to other shareholders, or people known to the business. This means that shares are often sold at a discount to the real value of the shares because the shareholders are "locked in" and either sell at the price that they are offered, or do not sell at all.
ADVANTAGES
Shares cannot be sold openly on the stock exchange, only to other shareholders, or people known to the business. This means that shares are often sold at a discount to the real value of the shares because the shareholders are "locked in" and either sell at the price that they are offered, or do not sell at all.
ADVANTAGES
- Limited liability
- Separate legal identity
- More flexible than a Plc
- Financial records remain relatively private
- More capital can be raised through the sale of shares
- More complex to set up due to increased legal requirements
- Some loss of control as shareholders have voting rights
- Unable to sell shares to the public
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