A PRIVATELY HELD COMPANY or CLOSE CORPORATION is a business company owned either by non-governmental organizations or by a relatively small number of shareholders or company members which does not offer or trade its company stock (shares ) to the general public on the stock market exchanges, but rather the company's stock is offered, owned and traded or exchanged privately. More ambiguous terms for a privately held company are UNQUOTED COMPANY and UNLISTED COMPANY.
Though less visible than their publicly traded counterparts, private
companies have major importance in the world's economy . In 2008, the
441 largest private companies in the United States accounted for US$
1,800,000,000,000 in revenues and employed 6.2 million people,
In the United States, the term privately held company is more often used to describe for-profit enterprises whose shares are not traded on the stock market.
OWNERSHIP OF STOCK
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In countries with public trading markets, a privately held business is generally taken to mean one whose ownership shares or interests are not publicly traded . Often, privately held companies are owned by the company founders and/or their families and heirs or by a small group of investors. Sometimes employees also hold shares of private companies. Most small businesses are privately held.
Subsidiaries and joint ventures of publicly traded companies (for
FORM OF ORGANIZATION
See also: Types of business entity
Private companies may be called corporations , limited companies , limited liability companies , unlimited companies , or other names, depending on where and how they are organized and structured. In the United States, but not generally in the United Kingdom, the term is also extended to partnerships , sole proprietorships or business trusts. Each of these 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 which are restricted to and are commonly used by private companies, for example the private company limited by shares in the United Kingdom (abbreviated _Ltd_) or private unlimited company and the proprietary limited company (abbreviated _Pty Ltd_) or unlimited proprietary company (abbreviated _Pty_) in Australia.
REPORTING OBLIGATIONS AND RESTRICTIONS
Privately held companies generally have fewer or less comprehensive
reporting requirements and obligations for transparency , via annual
reports, etc. than publicly traded companies do. For example, in the
United States, unlike in Europe, privately held companies are not
generally required to publish their financial statements . 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 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,
allowing them to take significant action without delays. In
Australia, Part 2E of the
Corporations Act 2001 requires that publicly
traded companies file certain documents relating to their annual
general meeting with the Australian Securities and Investments
Commission . 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 are
public companies, overseen by the Private
Researching private companies and private companies' financials can involve contacting the Secretary of State for the state of incorporation (or for LLC or partnership, state of formation), or using specialized private company databases such as Dun -webkit-column-width: 30em; column-width: 30em; list-style-type: decimal;">
* ^ Reifman, Shlomo; Murphy, Andrea D., eds. (6 Nov 2008).
"America\'s Largest Private Companies". _