Company Limited by Shares: Where the members of the companies are only liable for that range of liability that is contained by the face value of their purchased shares. Maximum Joint Stock Companies fall in these types. “Limited by shares” means that the liability of the shareholders to creditors of the company is limited to the capital originally invested, i.e. the nominal value of the shares and any premium paid in return for the issue of the shares by the company. The word ‘limited’ is being used at the end of these companies. These companies are divided into two categories as follows:
Private Limited Company: This type of company can be formed by at least two individuals having minimum paid-up capital having minimum 2 and maximum 50 members. They are required to use `Private Limited’ after their names.
Public Limited Company: The Company that is being constructed by minimum 7 people and maximum according to the shareholders with limited liability is called the public limited company. This company can raise funds from the general public through open invitations by selling its shares or accepting fixed deposits. This type of company is required to write either ‘public limited’ or ‘limited’ after their names.