1. Introduction
A common question entrepreneurs ask is: “Is a limited company private or public?” The answer depends on the type of limited company formed. In the UK, there are two main types of limited companies—Private Limited Companies (Ltd) and Public Limited Companies (PLC). Both offer limited liability but differ in ownership, rules, and public access.
2. What Is a Limited Company?
A limited company is a business structure where the company is a separate legal entity from its owners. Shareholders have limited liability, meaning they are only responsible for company debts up to the value of their shares.
3. Private Limited Company (Ltd)
- Ownership: Shares are privately held by individuals, families, or small groups.
- Share Transfer: Restricted; shares cannot be offered to the public.
- Minimum Shareholders: At least one.
- Raising Capital: Mainly through private investment or loans.
- Example: Small and medium-sized businesses.
4. Public Limited Company (PLC)
- Ownership: Shares can be sold to the public via the stock exchange.
- Share Transfer: Freely transferable without restriction.
- Minimum Shareholders: At least two and a minimum share capital of £50,000.
- Raising Capital: Through public investment and stock market listing.
- Example: Large corporations such as Tesco PLC or Barclays PLC.
5. Key Differences Between Private and Public Limited Companies
- Access to Capital: PLCs raise money from the public, Ltd companies rely on private funding.
- Regulation: PLCs face stricter rules, including financial reporting and governance.
- Control: Ltd companies often have closer control, while PLCs are influenced by shareholders and investors.
- Size and Growth: Ltd companies are common for startups and SMEs, while PLCs suit larger businesses aiming for expansion.
6. Which One Should You Choose?
- Private Limited Company (Ltd): Best for startups, family businesses, and SMEs seeking control and flexibility.
- Public Limited Company (PLC): Suitable for large businesses looking to raise significant capital through the stock market.
Frequently Asked Questions
1. Is every limited company public?
No, most limited companies in the UK are private (Ltd). Only those registered as PLCs are public.
2. Can a private limited company become a public one?
Yes, a private limited company can convert into a PLC if it meets the legal requirements.
3. Is a PLC always listed on the stock exchange?
Not always. A PLC can exist without being listed but has the option to list shares publicly.
4. Do both Ltd and PLC companies have limited liability?
Yes, both protect shareholders from personal liability beyond their shareholding.
5. Which is easier to set up, Ltd or PLC?
A private limited company is easier and cheaper to set up than a PLC.
6. Why do most businesses choose to be Ltd companies?
Because they are simpler to manage, require less capital, and offer more control.
Conclusion
So, is a limited company private or public? The answer is both—it depends on the type. A private limited company (Ltd) is owned privately and restricts share sales, while a public limited company (PLC) can sell shares to the public and raise large-scale funding. For most startups and small businesses, a private limited company is the preferred option.