Type of Company

To formalize your organization, first learn about and decide which business type is right for you. There are different types of company such as:

1. Private Company limited by shares

2. Public Company limited by shares

3. Company limited by Guarantee

4. Unlimited Company

Private Limited Company

A type of company that offers limited liability to its shareholders but that places certain restrictions on its ownership. These restrictions are spelled out in the company’s articles of association or bylaws and are meant to prevent any hostile takeover attempt. The major ownership restriction are: (1) shareholders cannot sell or transfer their shares without offering them first to the other shareholders for purchase, (2) shareholders cannot offer their shares or debentures to the general public over a stock exchange, (3) the number of shareholders cannot exceed a fixed figure (commonly 50).

Public Limited Company

Incorporated, limited liability firm whose securities may be offered to the general public and are traded on a stock exchange and can be bought and sold by anyone. Public companies are strictly regulated, and are required by law to publish their complete and true financial position so that investors can determine the true worth of its shares. Also called publicly listed company is this type of company is listed with stock exchange(s).

Company limited by Guarantee

Incorporated firm without share capital, and in which the liability of its members is limited to the amount each one of them undertakes to contribute at the time the firm is wound up.

Unlimited Company

Incorporated either with or without a share capital (and similar to its limited company counterpart) but where the liability of the members or shareholders is not limited - that is, its members or shareholders have a joint, several and unlimited obligation to meet any insufficiency in the assets of the company in the event of the company's formal liquidation.