2.2 Private Limited Company versus Public Limited Company

A private company is often set up for the purpose of conducting a small business. A private company is defined by the Companies Ordinance as a company which by its articles of association

　 a.restricts the right to transfer its shares;

　 b.limits the number of members to 50, not including employees of the company and former employees who were members of the company when employed and who have continued to be members; and

　 c.prohibits any invitation to the public to subscribe for any shares or debentures in the company.

A public company is a company which fails to comply with any one of the above requirements in the Companies Ordinance

A private company does not need to file its accounts with the Companies Registry, so it can maintain confidence of the financial situation of the company. On the other hand, a public company has to submit its annual accounts, which is then put on public record for inspection.

A listed company is a public company which has been listed on the Hong Kong Stock Exchange. The shares of a listed company can be freely transferable by the public. By listing the company, it obtains substantial finance by issuing and selling shares to the public. A listed company also enjoys better facilities from the banks.

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