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  Public and Private Companies

Introduction to Public and Private Companies

While a company is registered with the Registrar of Companies, it has to be registered either as a public or as a private company. The major practical variation among these is that a public limited company can provide its shares for sale to the general public, but a private limited company is restricted from doing so. A public limited company have to signal its status to all interested parties through having the words 'public limited company', or its short form 'plc', in its name. For a private limited company, the word 'limited' or 'Ltd' must come out as part of its name.

Private limited companies tend to be smaller businesses in which the ownership is divided between comparatively few shareholders who are generally fairly close to one another - for instance, a family company. Numerically, there are hugely more private limited companies in the UK (United Kingdom) than there are public ones. Of the 2.25 million UK (United Kingdom) limited companies now in presence, only 9,600 (presenting 0.4 per cent of the total) are public limited companies.

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Diagram: Numbers of public and private limited companies registered 2004 to 2009

Because individual public companies be apt to be larger, they are frequently economically more significant. In a number of industry sectors, like banking, insurance, oil refining and grocery retailing, they are totally dominant. Even though some large private limited companies present, several private limited companies are little more than the vehicle by which one-person businesses operate.

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