In this post we will be looking at meaning of private and public limited liability company, the difference and How to Register a Limited Company in Nigeria.
INTRODUCTION
In a limited company, the liability of members or subscribers of the company is limited to what they have invested or guaranteed to the company. Limited companies may be limited by shares or by guarantee.
In a company limited by shares, the liability of members is limited to the unpaid value of shares. In a company limited by guarantee, the liability of owners is limited to such amount as the owners may undertake to contribute to the assets of the company, in the event of being wound up. The former may be further divided in public companies (public limited companies) and private companies (private limited companies). Who may become a member of a private limited company is restricted by law and by the company’s rules. In contrast, anyone may buy shares in a public limited company. Limited companies can be found in most countries, although the detailed rules governing them vary widely.
In Nigeria, there are two types of limited companies namely: a company limited by guarantee and a company limited by shares. The company limited by shares is further divided into two namely a Private limited company (Ltd.) and a Public limited company (Plc.) In Nigeria shareholders of limited companies are only liable for the amount of money they contributed to the company. All Nigerian companies are governed by the Companies and Allied Matters Act (CAMA) 1990 and regulated by the Corporate Affairs Commission (CAC).
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What is of Private limited liability company?
A Private Limited Company is a type of business that is owned and operated by a small group of people. Private stakeholders are in charge of such entities. A Pvt. Ltd. company’s liability arrangement is less severe than that of an LLP or a sole proprietorship, which puts firm assets at risk in the event of a financial crisis. Although all partners in a Pvt. Ltd. corporation are responsible for the company’s loss, there is one exception. Shareholders can be subjected to such losses up to the number of shares held by them. Meaning, a member’s liability for recouping a business loss is limited to the number of shares they own.
What is a Public Limited company?
A public limited company is a business that is managed by directors and owned by shareholders. A public limited company can offer shares to the public. There are also other obligations that a PLC must meet due to being public, including further admin regarding tax, and making their financial reports public so would-be shareholders have all the information they need before investing. A public limited company is also listed on the stock market and essentially needs to be more open and public about its details than a private company.
DIFFERENCE BETWEEN PRIVATE AND PUBLIC LIMITED LIABILITY COMPANY.
- A public limited company is a company listed on a recognized stock exchange and the stocks are traded publicly. On the other hand, a private limited company is neither listed on the stock exchange nor are they traded. It is privately held by its members only.
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- The minimum number of members required to start a public company is seven. As against this, the private limited can be started with a minimum of two members.
- In case of a public company, it is compulsory to call a statutory general meeting of members. There is no such compulsion in case of a private company.
- The issue of prospectus or statement is mandatory in case of public company. However, this is not the case of a private company.
- The public company will require a certificate of commencement post incorporation to begin its operation. In contrast to this, a private company can start its business right after its incorporation.
- The transferability of shares is restricted completely in private limited company. While the shareholders of a public company can transfer their shares freely.
- Since there is a limited number of people and fewer restrictions, the scope of a private limited company is limited. In contrary, the scope of a public company is vast. This is because the owners of the company can raise capital from the general public and have to abide by may legal restrictions.
- There is a greater regulatory burden on a public limited company. This is because a great amount of information has to be made available to the public who are shareholders or prospective shareholders. A lot of money has to be invested in order to prepare reports and disclosures that match with the regulations provided by SEBI.
- A signed written resolution is received by holding general meetings of a private limited company.
- While it mandatory for public companies to appoint a company secretary, private companies may choose to do so only at their will.
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Depending upon one’s need a type of company is chosen to be registered. However, the principal reason for choosing a public company is to have the ability to offer shares to the public. One has to pay a price for this by complying with a greater number of restrictions and considerable loss of privacy.
HOW TO REGISTER A LIMITED COMPANY IN NIGERIA
A limited liability company or an unlimited liability company can be registered in Nigeria. Any of these sorts of businesses can be either private or public companies. A company is a legal entity that, upon incorporation, becomes a distinct legal entity with perpetual succession and the ability to sue and be sued. The Companies and Allied Matters Act (CAMA) 2020 governs the formation and regulation of companies in Nigeria.
The Companies and Allied Matters Act established the Corporate Affairs Commission (CAC) to govern the formation and management of companies in Nigeria. The CAC is responsible for the registration of businesses in Nigeria. Owing to the new regulations of the CAC that came into Search for Legal Articles. effect on January 1st, 2021, all business/company registration processes are now to be carried out online their website. The Process for Registering a Private Limited Company in Nigeria is as follows:
- Name Availability Check
- Pre-Registration Processes
- Pay The Filing Fee and Stamp Duty
- Uploading Scanned Documents
CONCLUSION.
Both public limited and private limited companies’ function in their zone. Both have their own rules in this nation and both abide by them and have their share in the economy. To own a liability company, one has to have all the necessary documents which must be scanned and must be submitted for approval, where they will be reviewed by the CAC and subsequently approved if the processes are in order. If the company is approved for registration, the CAC will issue a certificate of incorporation MEMART and Application Status Form electronically.