private limited company

A type of company that offers limited liability to its shareholders but that places certain restrictions on its ownership. These restrictions are spelled out in the company’s articles of association or bylaws and are meant to prevent any hostile takeover attempt.

The major ownership restriction are: (1) shareholders cannot sell or transfer their shares without offering them first to the other shareholders for purchase, (2) shareholders cannot offer their shares or debentures to the general public over a stock exchange, (3) the number of shareholders cannot exceed a fixed figure (commonly 50).