What is the Difference Between Limited Company and Private Limited Company?

The main difference between a limited company and a private limited company lies in the number of shareholders and the trading of shares. Here are the key differences between the two:

Limited Company:

A limited company is a legal entity separate from its owners, with its own assets, profits, and liabilities.
The liability of each member or shareholder is limited, which means their personal finances are protected from the company's debts and obligations.

Private Limited Company:

A private limited company is a type of limited company that does not publicly trade shares and is limited to a maximum of fifty shareholders.
Shares in private companies cannot be offered to the general public, and private limited companies restrict the transferability of shares.
Private limited companies have more flexibility in terms of management structure and decision-making compared to public limited companies.

In summary, a limited company is a separate legal entity with limited liability for its shareholders, while a private limited company is a specific type of limited company with restrictions on share trading and a maximum number of shareholders.

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What is the Difference Between Limited Company and Private Limited Company?

Comparative Table: Limited Company vs Private Limited Company

The main differences between a Limited Company and a Private Limited Company are as follows:

Feature	Limited Company	Private Limited Company
Meaning	A limited company is a legal entity that is separate from its members or owners, and it can own assets and enter into contracts on its own.	A private limited company is a closely held one and requires at least two or more persons for its formation. It is not listed on a stock exchange, and its shares are not offered for sale to the general public.
Incorporation Requirements	A limited company requires seven persons for its setup.	A private limited company requires at least two or more persons for its formation.
Minimum Number of Directors	A limited company must have a minimum of three directors.	A private limited company must have a minimum of two directors.
Share Distribution	Shares of a limited company are offered for sale to the general public.	Shares of a private limited company are not offered for sale to the general public, and the maximum number of shareholders can sum up to 50.
Stakeholder Liability	The liability of stakeholders is limited to the value of their shares in the company.	The liability of stakeholders is limited to the value of their shares in the company.
Working Capital	Limited companies typically operate with more working capital than private limited companies.	Private limited companies may have less working capital than limited companies.
Perpetual Existence	Public limited companies have perpetual succession, meaning that they continue to exist until the law requires them to cease operations. The death or cessation of a particular owner does not impact the existence of the brand.	Private limited companies are closely held and do not have perpetual succession.

In summary, the main differences between a Limited Company and a Private Limited Company are the number of members and directors required, the mode of share distribution, and the amount of working capital.

Guilherme Mazui

Guilherme Mazui is graduated in journalism from the Federal University of Minas Gerais (UFMG) and a master's degree in Communication from the University of São Paulo (USP). In addition, he has experience in advertising writing and has worked as a content editor in several companies.