Private Limited Company(ltd)

            The N° of shareholders here ranges from 2 shareholders to a maximum of 50. The name of the company ends with the world limited showing that it has a limited liability.

            A private limited company is often under the control of few persons. This type of companies are called close companies e.g some travelling agencies such as; BUCA Voyages, Vatican Express ETC.

CHARACTERISTICS OF PRIVATE LIMITED COMPANY

• The membership ranges from 2 to 50
• They publish annual account to the register of companies.
• They do not appeal to the public subscription of the share.
• They enjoy limited hability
• There is no transferability of shares.
• The name end with limited.

ADVANTAGES OF PRIVATE LIMITED COMPANY

• They have a separate legal entity
• Shareholders have eliminated liability
• It can raise more capital because it has many shareholders and assets which act as collateral security.
• It enjoys economies of scale
• It has a longer life span because hence it can only close of the lifes of shareholders hence it can only close down if it is bankrupt.
• It suffer little fraud.
• There is efficiency agreement because of the size of the business if it has assets to bankrupt.

DISADVANTAGES OF PRIVATE LIMITED COMPANY

• Share can not be transferred without the knowledge of other shares.
• It shares can not be sold to the General public
• The formation procedure and legalty and expensive
• Decision making often slow since many people are consulted before taking decision.
• It affaires can not be kept secret because they issue annual reports.
• Management diseconomies. This may come as a result of conflict of interest
• There is lack of personal contact between the owner and the director.
• High level of competition. Increasing profit attract prospectives investors joint the business.