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July 15, 2021

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Public and Private Limited Companies

What is a Public Limited Company?

A public limited company is a   business organization that operates as a separate legal entity from its owners. It is operated by shareholders.

Shares of a public limited company are listed on the stock exchange and its shares are traded in the market publicly. Shareholders of a public limited company are limited to potentially losing only the amount they have invested in shares (face value).

Advantages of Public Limited Company:

Some advantages of a public limited company are given below;

  • Led by Board of Directors.
  • Limited Liability.
  • Number of Members.
  • Transferable shares.
  • Life Span.
  • Financial Privacy.
  • Large Capital.
  • Led by Board of Directors.
  • Public limited.

Examples of Public Limited Companies:

  • Aisha Steel.
  • Al-Ghazi Tractors.
  • Allied Bank Limited.
  • Amreli Steels.
  • Arif Habib Corporation.
  • Askari Bank.
  • At-Tahur.
  • Atlas Honda.

What is a Private Limited Company?

A private limited company is a small business, in which owners have liability to their shares. In this type of business, the number of shareholders is limited to 50, and shareholders can not trade their shares publicly.

Advantages of Private Limited Company:

Some advantages of holding a private limited company is :

1) Limited Liability

Limited Liability is that the financial liability of shareholders is limited to only their shares. Therefore, in case a private limited company faces a financial crisis, they would not risk losing their personal assets.

2) Restricted Trade of Shares

There is a restriction on the sale or transfer of shares. It is an advantage to some shareholders because shareholders who want to sell shares cannot sell them to outside buyers without consent. Shareholders must agree to the transfer of shares; therefore, the risk of competitors’ takeovers is low.

3) Continued existence

Continued existence is another advantage of a private limited company. If the owner dies or leaves the business it will still exist. Private limited companies are incorporated, which becomes an independent legal entity, meaning it is able to sue or own assets separate from the company owner.

4) Tax Breaks

Private limited companies also have tax advantages. For example, corporate taxes are lower than other types of businesses.

Examples of Private Limited Company:

  • COCA-COLA PAKISTAN LIMITED.
  • PAKISTAN PTA LIMITED .
  • GUL AHMED ENERGY LIMITED.

Collective Partnership:

Collaborative partnerships refer to agreements and actions taken by two or more organizations to share their resources, expertise, and knowledge to achieve a common goal. These partnerships involve a mutual agreement between the parties involved to share their capital resources, such as funding, staff, equipment, or technology, for a specific project or initiative.

The organizations involved in a collaborative partnership share the same or similar goals and objectives, and they work together towards achieving them. The primary aim of a collaborative partnership is to enable all parties to benefit from the shared resources and expertise, which would not have been possible individually.

In a collaborative partnership, each organization brings its unique strengths and expertise, which complement the others’ capabilities. This way, the partners can leverage each other’s strengths, mitigate their weaknesses, and achieve their common goals more efficiently and effectively. Overall, collaborative partnerships help organizations to pool their resources and efforts to achieve greater impact and outcomes than they could have done alone.

Corporation:

A corporation is a type of business that is separate from its owners, with its own legal rights and responsibilities. It can enter into contracts, borrow money, sue and be sued, hire employees, and pay taxes. Shareholders enjoy limited liability protection, and the corporation can raise funds by issuing shares of stock to investors. However, corporations have increased regulation and formalities, double taxation of profits, and higher start-up costs.

 

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