What Is the Difference Between a Public Limited Company and a Private Limited Company?

It is important to know the difference here so I’m glad you asked! As their names suggest, both “limit” the liability for its stockholders as long as the company runs as it should and doesn’t run into problems that would pierce the corporate veil. There are certainly differences which exist between the two though.

A private company:

  • does not offer stock to the general public
  • is usually referred to as “closely-held” because stockholders are typically the founders, family members, and/or employees
  • has no duty to disclose finances to the public & avoids the SEC

A public company:

  • can generate a great deal of financing by selling stock to the general public, which is traded on an exchange
  • must abide by numerous SEC reporting requirements
  • has separation between ownership and control of the company

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