Private company and public company
Private and public describe a legal status related to the company's shares; Ltd. describes liability, not the same classification.
A public company is, according to the statutory definition, a company whose shares are registered for trading on the stock exchange or were offered to the public pursuant to a prospectus and are held by the public. A private company is a company that is not public. A large company can be private, and a public company is not necessarily government-owned. A private company can also be an Ltd. There are different reporting and regulatory obligations; a private company may have additional reporting obligations, for example when it issues bonds to the public. Public classification is not a guarantee of profit or investment safety.
A fictional company has thousands of employees but its shares are held privately. The number of employees alone does not make it public.
Explain why a public company is not necessarily a company owned by the state.
Official information and further reading ↗Check your understanding
Can a private company be an Ltd.?
- Yes
- No
- Only after a public offering
Answer and explanation
Yes. They are two different characteristics.
What does not by itself determine that a company is public?
- Number of employees
- Registration of shares for trading
- The statutory definition
Answer and explanation
Number of employees. The size of the company and the number of its employees do not by themselves determine the status.
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