Privately held company

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A privately held company (or simply a private company) is a company whose shares and related rights or obligations are not offered for public subscription or publicly negotiated in their respective listed markets. Instead, the company's stock is offered, owned, traded or exchanged privately, also known as "over-the-counter". Related terms are unlisted organisation, unquoted company and private equity.

Private companies are often less well-known than their publicly traded counterparts but still have major importance in the world's economy. For example, in 2008, the 441 largest private companies in the United States accounted for $1.8 trillion in revenues and employed 6.2 million people, according to Forbes.^[1]

In general, all companies that are not owned by the government are classified as private enterprises. This definition encompasses both publicly traded and privately held companies, as their investors are individuals.

Private ownership of productive assets differs from

] but it may be used anywhere in contrast to a state-owned or a collectively owned company.

In the United States, a privately held company refers to a business entity owned by private stakeholders, investors, or company founders, and its shares are not available for public purchase on stock exchanges. That contrasts with public companies, whose shares are publicly traded, which allows investing by the general public.

In countries with public trading markets, a privately held business is generally taken to mean one whose ownership

are privately held.

Subsidiaries and

, as are required by the accountancy and securities industry rules relating to groups of companies.

Form of organization

Private companies may be called

. Each of those categories may have additional requirements and restrictions that may impact reporting requirements, income tax liabilities, governmental obligations, employee relations, marketing opportunities, and other business obligations and decisions.

In many countries, there are forms of organization that are restricted to and are commonly used by private companies, for example, the

.

In India, private companies are registered by the Registrar of Companies, which is under the Ministry of Corporate Affairs. Indian private companies must contain the word Private Limited at the end of their names.^[3]

Privately held companies generally have fewer or less comprehensive reporting requirements and obligations for

. By not being required to disclose details about their operations and financial outlook, private companies are not forced to disclose information that may potentially be valuable to competitors and so can avoid the immediate erosion of customer and stakeholder confidence in the event of financial duress. Further, with limited reporting requirements and shareholder expectations, private firms are afforded a greater operational flexibility by being able to focus on long-term growth rather than quarterly earnings.

In addition, private company executives may steer their ships without shareholder approval, which allows them to take significant action without delays.^[4][5]

In Australia, Part 2E of the Corporations Act 2001 requires publicly traded companies to file certain documents relating to their annual general meeting with the Australian Securities and Investments Commission (ASIC). There is a similar requirement for large proprietary companies, which are required to lodge Form 388H to the ASIC containing their financial report. In the United States, private companies are held to different accounting auditing standards than public companies, overseen by the Private Company Counsel division of the Financial Accounting Standards Board.^{(see external links)}

Researching private companies and private companies' financials in the United States can involve contacting the secretary of state for the U.S. state of incorporation (or for LLC or partnership, state of formation), or using specialized private company databases such as Dun & Bradstreet. Other companies, like Sageworks, provide aggregated data on privately held companies, segmented by industry code.^[6] By contrast, in the United Kingdom, all incorporated companies are registered centrally with Companies House.^[7]

Privately held companies also sometimes have restrictions on how many

, requires registration of investment companies that have more than 100 holders. In Australia, section 113 of the Corporations Act 2001 limits a privately held company to 50 non-employee shareholders.

Privately owned enterprise

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A privately owned enterprise is a commercial enterprise owned by private investors, shareholders or owners (usually collectively, but they can be owned by a single individual), and is in contrast to state institutions, such as publicly owned enterprises and government agencies. Private enterprises comprise the private sector of an economy. An economic system that 1) contains a large private sector where privately run businesses are the backbone of the economy, and 2) a business surplus is controlled by the owners, is referred to as capitalism. This contrasts with socialism, where the industry is owned by the state or by all of the community in common. The act of taking assets into the private sector is referred to as privatization.

A privately owned enterprise is one form that private property may take.

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• Sole proprietorship: A sole proprietorship is a business owned by one person. The owner may operate on his or her own or may employ others. The owner of the business has total and unlimited personal liability for the debts incurred by the business. This form is usually relegated to small businesses.
• Partnership: A partnership is a form of business in which two or more people operate for the common goal of making a profit. Each partner has total and unlimited personal liability for the debts incurred by the partnership. There are three typical different types of classifications for partnerships: general partnerships, limited partnerships, and limited liability partnerships.
• Corporation: A business
  government-owned corporations
  . A corporation may be privately held (for example, a close company - see below) or publicly traded.
• Hybrid Types: Some countries, like Germany, the United States, and the United Kingdom have created a hybrid type of entity that has characteristics of both a corporation and a partnership. In Germany, it is called a Gesellschaft mit beschränkter Haftung (GmbH), in the United States it is called a Limited Liability Company (LLC), and in the United Kingdom it is called a Limited Liability Partnership (LLP). It is considered a corporate body similar to a corporation but is typically taxed like a partnership.

In the United Kingdom, a close or closely held company is defined as a company which is controlled by either five or fewer shareholders or is controlled by shareholders who are also directors.^[8]

• Limited company
• Private company limited by shares
• Private equity
• Public company
• Unlisted public company

External links

Wikimedia Commons has media related to Privately held companies.

• Private Company Council Archived 2016-01-07 at the Wayback Machine, a part of the Financial Accounting Standards Board