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Limited Company

Limited company is a legal term used to define a type of business in England and Ireland. By definition, a limited company has a limited and usually predetermined number of owners (i.e., shareholders) with a financial stake in the business. Generally, they are small, family-owned businesses, and the intent of the limited number of owners is to maintain control, and eventually pass it along to their heirs. The potential liability on the part of owners is limited to the dollar amount they have invested in that business. While such a business may be public or private, it is generally the latter. Since it is limited, it is not open for public investment, and so the financial responsibilities (as well as potential profits) are limited to its shareholders. Thus, the shares of a limited company will not be made available for purchase on a public stock exchange.

Fast Facts

  • The advantages of a limited company include the following: less oversight, lighter regulations on disclosure, control of leadership and decision-making by the original investors.
  • The disadvantages are less outside investment from potentially lucrative sources, as well as greater potential liability, financial and otherwise.

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