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public vs private company

Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA LW Exams › public vs private company

  • This topic has 1 reply, 2 voices, and was last updated 1 year ago by MikeLittle.
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  • January 6, 2022 at 6:22 pm #645412
    Imran.Sajjad
    Member
    • Topics: 24
    • Replies: 7
    • ☆

    A private company can be limited and unlimited. It can be limited by shares and by guarantee (could you explain what does it mean?)

    A public company can be limited by shares and by guarantee (but again what does it mean?)

    January 13, 2022 at 9:22 am #645823
    MikeLittle
    Keymaster
    • Topics: 26
    • Replies: 22699
    • ☆☆☆☆☆

    Firstly, let’s get rid of one MAJOR error in your post – a public company CANNOT be limited by guarantee. Public companies are, by statutory definition, limited by shares

    Now, private companies. These may be limited or unlimited. If they are limited, that limitation of shareholder liability may be limited by either shares or guarantee

    If limited by guarantee, the company may nevertheless have a share capital but this possibility no longer exists for new companies being registered

    A private company where shareholder liability is limited by shares means that, in the event of an insolvent liquidation in the future, it will not be possible to hold the shareholders of the company liable to contribute to the deficiency of assets beyond the amount of any as-yet-unpaid amounts on the capital value of shares held by them individually

    A private company limited by guarantee means that, in the event of a future insolvent liquidation, the unpaid creditors will be unable to hold the members of the company liable to contribute to the deficiency of assets beyond the amount that individual members have guaranteed that they will contribute to such a shortfall

    OK?

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