The Difference Between a Public and a Private Limited Company

When setting up a company, entrepreneurs and future business owners have a few options in regard to style and structure. Each has distinct benefits and drawbacks for individuals. Two types of structures include the public or private limited company.

Defined

Public limited companies are more common in the UK rather than the United States. Two or more individuals can start the company and sell ownership shares to the general public. A private limited company offers limited liability to shareholders, who are generally few in number.

Features

A private limited company typically has more restrictions than public limited companies. These restrictions include: shareholders must offer their shares to other owners prior to selling them openly; owners cannot sell shares through a stock exchange; and the number of shareholders may not usually exceed 50 in number, according to BusinessDictionary.com.

Significance

Creating a public limited company allows business owners to generate capital through selling shares, where as private companies are unable to do so. However, the benefits of each is the ability of individuals to limit or prohibit personal liability from business activities.

References

• Business Dictionary: Private Limited Company
• Investopedia: Public Limited Company - PLC