What does Pty Ltd mean?

Ever wondered what Pty Ltd means? Well, so have I. Stick around and we’ll work it out together.

Hi everyone, Simon here from the Contract Company. Contracts, it’s what we do all day, every day, and sometimes overnight. Lucky me.

Pty Ltd, righto. It means proprietary limited. Nice, what does that mean, Simon?

Well, think of proprietary as meaning private. So, Pty Ltd relates to companies and the Pty, the proprietary, means private, which means the shares in that company are privately held.

And who are they privately held by? Well, they’re held by the owners of the company. Nice, Simon.

Who are the owners of the company? The owners of the company are the people that own the shares.

So, a proprietary limited company with 100 shares is obviously owned by the person or people that own those 100 shares because one person may own all 100 shares or you might have 100 people who own one share each.

Proprietary means privately held, as opposed to just Ltd or limited or publicly held company.

So What Does Pty Ltd Mean?

Anyway, I’m jumping ahead of myself. Pty Ltd, proprietary, privately-owned shares. Ltd means limited.

And when you put those two together, proprietary limited, it means that the privately held shares are owned by a group of shareholders and the amount that they owe the company or their risk in the company is limited by the amount they paid for the shares.

So, Ltd means that their holdings are limited. Their holdings are limited to what? They’re limited to the amount that they paid for their shares.

Which is simple, I mean, that’s a complex way of saying if you paid $100 for one share and the company only has one share, you own the company because you own the one share and you bought it or you bought that one share for $100.

So, that’s the limit or the extent of your risk or loss if the company falls over, goes into liquidation, declines, et cetera. You’re only limited to the amount you paid for the shares.

Now, if you haven’t fully paid for the shares, say you’ve only paid 40 of the $100, then you have to pay the other 60.  And that’s the amount that you are potentially liable for to the full amount of the shares.

So, proprietary limited, privately held and limited to the amount that you bought the shares for. Hope that makes sense. That was a long-winded way of probably getting to the point on that one.

Anyway, hope you bore with me. Actually, I probably did bore you, didn’t I?

Any questions, please let us know, simon@contractcompany.com.au or 1-800-355-455. Thanks very much.

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