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Companies and financial accounting
Companies and financial accounting

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1.3.1 Private limited companies and public limited companies

Companies limited by shares come as private limited companies (those who have Ltd attached to their name) and public limited companies (those who have plc, PLC or Plc attached to their name, or ccc in Welsh).

Note that in most countries including the UK there are many more private limited companies than public limited companies. The reason is that most of these companies are very small.

Table 2 shows the translation of the terms ‘public limited company’ and ‘private limited company’ in different languages.

Table 2 Public and private limited companies in selected countries
UK Public limited liability company (plc) Private limited liability company (Ltd)
France Société Anonyme (SA) Société à Responsabilité Limitée (SARL)
Germany Aktiengesellschaft (AG) Gesellschaft mit beschränkter Haftung (GmbH)
Italy Società per azioni (SPA) Società a responsabilità limitata (SRL)
Netherlands Naamloze Vennootschap (NV) Besloten Vennootschap (BV)
Spain Sociedad Anónima (SA) Sociedad de Responsabilidad Limitada (SL or SRL)
Japan Kabushiki Kaisha (KK) Godo Kaisha (GK)

Private limited companies cannot list their shares on a stock exchange because their shares are not allowed to be traded by the investing public. Shareholders of private limited companies usually must ask permission from the other shareholders in the company to sell their shares to a new shareholder. Investors in private limited companies therefore invest for the long term in a particular company.

Public limited companies can list their shares on a stock exchange where they can be traded by the investing public. A listed company is a public limited company that has its shares of another class of securities (for example, corporate bonds) listed on the UK’s official list. A quoted company is a public limited company whose shares are:

  • included in the UK’s official list, or
  • listed on a stock exchange in a country in the European Economic Area (EEA), or
  • listed on the New York Stock Exchange or the NASDAQ.

Private and public limited companies must have at least one shareholder. Small companies may have only a few shareholders. Large companies, and especially quoted companies, can have thousands or even hundreds of thousands of shareholders.