private limited company

Definition

A type of company that offers limited liability, or legal protection for its shareholders but that places certain restrictions on its ownership. These restrictions are defined in the company's bylaws or regulations and are meant to prevent any hostile takeover attempt.

The major ownership restrictions are:

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

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