Private Limited

hfot2 · Apr 17th, 2007, 23:22

What exactly is a private, limited company?

We've been told they are better companies for which to work and that there are advantages and benefits in working for these companies. True? What?

SteamBuff · Apr 17th, 2007, 23:32

I assume that you mean an Indian private limited company? and not a foreign i.e British p.l.c

Nick-H · Apr 17th, 2007, 23:32

a limited liability (the shareholders are not liable for debts other than the value of their shares) company whose shares are privately held and may not be bought or sold without permission of the shareholders. Often a family concern will be set up this way.

Obviously such a company's shares are not traded on any public exchange

That was more or less it when I was at school, but I expect there is a more upt-to date version, and details may vary from country to country.

You are enquiring about India?

A company's board of directors is entirely responsible only to its shareholders. It is not possible to say that this structure would, per se, make it a better or worse employer.

sudheer poppa · Apr 17th, 2007, 23:45

Its a common mistake in India to call the private sector as private limited... Most probably what you have been told is to avoid the public sector (government owned) companies which were looked upon as the epitome of complacency..

These days even most of the public sector companies are quite competitive if they are competing in a opened sector.

Strict literal meaning ofcourse is what Nick said as company whose ownership is in the hands of a limited number of persons (I believe the max was 50, but can be wrong here) and not publicly traded in a stock exchange..

SteamBuff · Apr 17th, 2007, 23:47

Here are the details of the 3 types of Limited Company in the UK.

Public Limited Company

Company registered as a plc under the provisions of the Companies Act 1980. The company's name must carry the words ‘public limited company’ or initials ‘plc’ and must have authorized share capital over £50,000, with £12,500 paid up – paid to the company by the shareholders. Plcs may offer shares to the public and are more tightly regulated than limited companies. Converting a private limited company into a public one has advantages, such as the ability to raise share capital. However, it does have potential disadvantages, such as being subject to the scrutiny of the financial media and city analysts (the company's financial records must be available for any member of the public to scrutinize).

Private Limited Company

Registered company which has limited liability (the shareholders cannot lose more than their original shareholdings), and a minimum of two shareholders and a maximum of fifty. It cannot offer its shares or debentures to the public and their transfer is restricted. A private limited company is treated as a legal entity.

Limited Company

Company for whose debts the members are liable only to a limited extent. The capital of a limited company is divided into small units, and profits are distributed according to shareholding.

Nick-H · Apr 18th, 2007, 00:01

I think sudheer has probably hit the nail on the head.

For myself, if I had to work, a nice cosy, safe corner of a complacent government undertaking would suit me just fine!

crvlvr · Apr 18th, 2007, 00:12

Quote:

Originally Posted by hfot2

What exactly is a private, limited company?

An ownership type that is usually called as "Inc." in the US. You are better off working for a public limited company (whose stock is traded on a stock exchange)

Aishah · Apr 18th, 2007, 00:30

I used to think they meant Pty. Ltd - around here there are many Private Limited coys. for all sorts of things and I honestly don't think half of them are legally constructed or what these words really mean. People with any sort of small business add Private Limited on the end of the title but I wonder if they know what they are doing???

crvlvr · Apr 18th, 2007, 01:33

Private limited basically means that the liability of the company is limited to assets of the company. In other words, the owner's personal assets are safe from any firm related losses/law suits. This is obviously the main reason why owners create private limited companies (as opposed to proprietorships or partnerships). Many of these companies pack up and skip town when the going gets rough. Working fora private limited company offers no significant advantages to the employees. But, I guess its better than not having a job.

Nick-H · Apr 18th, 2007, 01:42

Among the best years (16) of my working life were spent working for a family-owned private limited company in UK. It's non-contributory pension fund was a pretty good benefit (fingers crossed, in these days when those things can no longer be seen as 100% certain...) too.

Actually, my other long-term employment (11 years) was also for a private ltd. --- but only because its share capital was 100% owned by a Japanese giant mnc. I guess subsidiaries is another reason for privates.

All in all, you have to judge the company and its management, rather than its structure.

hfot2 · Apr 18th, 2007, 03:47

My question was about companies in India.

I was talking with a fabulous driver who works for a tour/travel company. He said the company he worked for was a private limited company and it was the best type company to work for. Then the discussion got too technical for me - benefits, job security, pay, retirement etc. Seemed like he was saying this was the best kind of company for him to work for and I was just wondering why.

distaff half of hfot2

sudheer poppa · Apr 18th, 2007, 04:16

Quote:

Originally Posted by hfot2

I was talking with a fabulous driver who works for a tour/travel company.

Then I would not even have to reinforce what I said before..

He is certainly comparing it to being a private driver for a car owner or private businesses; where they get no benefits, a fixed salary for many years and hardly any flexibility with regards to work hours or personal life.. He is commenting on a very limited career avenue which is too specific to extrapolate to any other profession (maybe except to, being a gardner or a security man) or at a larger level to India on the whole..

Aishah · Apr 18th, 2007, 08:55

Thanks crvlr for clear, simple explanation. As far as the local Pvt.Ltd companies I don't think they would have any idea of the 'rules' attached to them - job security, retirement plan etc. would be unheard of to these people. They operate in a world of their own, own 'rules' but for instance, in the trucking field there is a Union and this does help the drivers for pay rates. I am talking 'country town' here - I know within the metros, businesses have strict legalities to adhere to . I think the day will come when this will happen here...

wonderwomanusa · Apr 18th, 2007, 09:51

Quote:

Originally Posted by hfot2

What exactly is a private, limited company?

We've been told they are better companies for which to work and that there are advantages and benefits in working for these companies. True? What?

From what Nick says, these would seem to be what we in the USA call S-Corporations, or "closely held corporations." In the US, these are often limited to family members and are a way to transfer wealth from one generation to another. Doesn't sound like that is the Indian way ...

Epicure · Apr 18th, 2007, 11:53

Private Limited company in Indian context refers to any company registered under the company's act 1956, having minimum of 2 and maximum of 50 shareholders. The company shares not listed on any Indian stock exchange for Private Limited Company. If the company goes for an initial public offer (IPO) and listed on any stock exchange in India, the private limited company upgrades itself to public limited, meaning minimum of 5 shareholders and there is no upper limit. The shares of the public limited company are traded in any stock exchange in India.

Apr 17th, 2007, 23:22	#1
hfot2 MemberS Join Date: Aug 2004 Location: Vermont Posts: 647	Private Limited What exactly is a private, limited company? We've been told they are better companies for which to work and that there are advantages and benefits in working for these companies. True? What?

Apr 17th, 2007, 23:45	#4
sudheer poppa Senior brick in the wall Join Date: Apr 2004 Location: Pole Posts: 1,475	Its a common mistake in India to call the private sector as private limited... Most probably what you have been told is to avoid the public sector (government owned) companies which were looked upon as the epitome of complacency.. These days even most of the public sector companies are quite competitive if they are competing in a opened sector. Strict literal meaning ofcourse is what Nick said as company whose ownership is in the hands of a limited number of persons (I believe the max was 50, but can be wrong here) and not publicly traded in a stock exchange.. __________________ We must learn to live together as brothers or perish together as fools - MLK Pic Page 1 Pic Page 2 When my life changed over a week

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Apr 17th, 2007, 23:32	#2
SteamBuff Senior Member Join Date: Nov 2006 Location: Essex, Endland Posts: 373	I assume that you mean an Indian private limited company? and not a foreign i.e British p.l.c

Apr 17th, 2007, 23:32	#3
Nick-H This is just a cameo appearance Join Date: Oct 2004 Location: Chennai, India Posts: 36,211	a limited liability (the shareholders are not liable for debts other than the value of their shares) company whose shares are privately held and may not be bought or sold without permission of the shareholders. Often a family concern will be set up this way. Obviously such a company's shares are not traded on any public exchange That was more or less it when I was at school, but I expect there is a more upt-to date version, and details may vary from country to country. You are enquiring about India? A company's board of directors is entirely responsible only to its shareholders. It is not possible to say that this structure would, per se, make it a better or worse employer.

Apr 17th, 2007, 23:47	#5
SteamBuff Senior Member Join Date: Nov 2006 Location: Essex, Endland Posts: 373	Here are the details of the 3 types of Limited Company in the UK. Public Limited Company Company registered as a plc under the provisions of the Companies Act 1980. The company's name must carry the words ‘public limited company’ or initials ‘plc’ and must have authorized share capital over £50,000, with £12,500 paid up – paid to the company by the shareholders. Plcs may offer shares to the public and are more tightly regulated than limited companies. Converting a private limited company into a public one has advantages, such as the ability to raise share capital. However, it does have potential disadvantages, such as being subject to the scrutiny of the financial media and city analysts (the company's financial records must be available for any member of the public to scrutinize). Private Limited Company Registered company which has limited liability (the shareholders cannot lose more than their original shareholdings), and a minimum of two shareholders and a maximum of fifty. It cannot offer its shares or debentures to the public and their transfer is restricted. A private limited company is treated as a legal entity. Limited Company Company for whose debts the members are liable only to a limited extent. The capital of a limited company is divided into small units, and profits are distributed according to shareholding.

Apr 18th, 2007, 00:01	#6
Nick-H This is just a cameo appearance Join Date: Oct 2004 Location: Chennai, India Posts: 36,211	I think sudheer has probably hit the nail on the head. For myself, if I had to work, a nice cosy, safe corner of a complacent government undertaking would suit me just fine!

Apr 18th, 2007, 00:30	#8
Aishah She-who-must-be-obeyed! Join Date: Mar 2007 Location: Jaisalmer Posts: 7,624	I used to think they meant Pty. Ltd - around here there are many Private Limited coys. for all sorts of things and I honestly don't think half of them are legally constructed or what these words really mean. People with any sort of small business add Private Limited on the end of the title but I wonder if they know what they are doing???

Apr 18th, 2007, 01:33	#9
crvlvr Guru Join Date: Sep 2004 Location: Hollywood Posts: 4,667	Private limited basically means that the liability of the company is limited to assets of the company. In other words, the owner's personal assets are safe from any firm related losses/law suits. This is obviously the main reason why owners create private limited companies (as opposed to proprietorships or partnerships). Many of these companies pack up and skip town when the going gets rough. Working fora private limited company offers no significant advantages to the employees. But, I guess its better than not having a job.

Apr 18th, 2007, 01:42	#10
Nick-H This is just a cameo appearance Join Date: Oct 2004 Location: Chennai, India Posts: 36,211	Among the best years (16) of my working life were spent working for a family-owned private limited company in UK. It's non-contributory pension fund was a pretty good benefit (fingers crossed, in these days when those things can no longer be seen as 100% certain...) too. Actually, my other long-term employment (11 years) was also for a private ltd. --- but only because its share capital was 100% owned by a Japanese giant mnc. I guess subsidiaries is another reason for privates. All in all, you have to judge the company and its management, rather than its structure.

Apr 18th, 2007, 03:47	#11
hfot2 MemberS Join Date: Aug 2004 Location: Vermont Posts: 647	My question was about companies in India. I was talking with a fabulous driver who works for a tour/travel company. He said the company he worked for was a private limited company and it was the best type company to work for. Then the discussion got too technical for me - benefits, job security, pay, retirement etc. Seemed like he was saying this was the best kind of company for him to work for and I was just wondering why. distaff half of hfot2

Apr 18th, 2007, 08:55	#13
Aishah She-who-must-be-obeyed! Join Date: Mar 2007 Location: Jaisalmer Posts: 7,624	Thanks crvlr for clear, simple explanation. As far as the local Pvt.Ltd companies I don't think they would have any idea of the 'rules' attached to them - job security, retirement plan etc. would be unheard of to these people. They operate in a world of their own, own 'rules' but for instance, in the trucking field there is a Union and this does help the drivers for pay rates. I am talking 'country town' here - I know within the metros, businesses have strict legalities to adhere to . I think the day will come when this will happen here...

Apr 18th, 2007, 11:53	#15
Epicure Senior Member Join Date: Mar 2007 Location: India Posts: 196	Private Limited company in Indian context refers to any company registered under the company's act 1956, having minimum of 2 and maximum of 50 shareholders. The company shares not listed on any Indian stock exchange for Private Limited Company. If the company goes for an initial public offer (IPO) and listed on any stock exchange in India, the private limited company upgrades itself to public limited, meaning minimum of 5 shareholders and there is no upper limit. The shares of the public limited company are traded in any stock exchange in India.