Private limited companies.

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Mostly all private limited companies are made up of people who know each other such as friends, family or any other work associates. They buy the shares and become part owners of the company. Shares cannot be bought by the public, but only by this small group of people, in other words the owner can control who buys the shares. This is why it is called a private limited company. There must be a limited of 2 people to start the business, but there’s no upper limit or how many owners there are. A private limited company has limited at the end, which is also known as Ltd, this is to distinguish it from a public limited company. The company can expand by selling more shares to gain more capital, but is limited in this as shares cannot be sold on the Stock Market. Private limited companies are normally medium-sized companies. The shareholders have limited liability which means that if the company goes bankrupt the shareholders can be held responsible only for payments up to the value of their shares; they do not run the risk of having to sell their personal possessions to pay off debts. This is because the company has it’s own legal identity, separate from the shareholders. This also means that the company can sue and can be sued. To show that the business has a separate identity it is normally called a company. The owners and shareholders have the option to run the company.

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     Each year the company must hold an Annual General Meeting of the shareholders. They also have to send an independently photo copy of the company accounts to the registrar of companies where they are available to the public. The shareholders cannot sell their shares to the general public on the stock exchange and or transfer then to anyone else without permission from other shareholders.

Setting up a Private Limited Company

If bill wants to start a limited company then he has to comply with the companies acts and register the company with the registrar of companies. To ...

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