A privately held company or close corporation is a business company In the United States, a company is a corporation—or, less commonly, an association, partnership, or union—that carries on an industrial enterprise." Generally, a company may be a "corporation, partnership, association, joint-stock company, trust, fund, or organized group of persons, whether incorporated or not, and any receiver, owned either by non-governmental organizations A non-governmental organization is a legally constituted, non-governmental organization created by natural or legal persons with no participation or representation of any government. In the cases in which NGOs are funded totally or partially by governments, the NGO maintains its non-governmental status by excluding government representatives from or by a relatively small number of holders who do not trade the stock publicly on the stock market A stock market or equity market is a public market for the trading of company stock and derivatives at an agreed price; these are securities listed on a stock exchange as well as those only traded privately. Less ambiguous terms for a privately held company are unquoted company and unlisted company.

Though less visible than their publicly traded A public company or publicly traded company is a company that has permission to offer its registered securities for sale to the general public, typically through a stock exchange, or occasionally a company whose stock is traded over the counter (OTC) via market makers who use non-exchange quotation services counterparts, private companies have a major importance in the world's economy An economy consists of the economic system of a country or other area, the labor, capital and land resources, and the economic agents that socially participate in the production, exchange, distribution, and consumption of goods and services of that area. A given economy is the end result of a process that involves its technological evolution,. In 2008, the 441 largest private companies in the USA accounted for $1.8 trillion in revenues and employed 6.2 million people, according to Forbes Forbes, Inc. is a privately held publishing and media company. Its flagship publication is Forbes, a bi-weekly magazine, with a circulation over 900,000. In August 2006, the private equity firm, Elevation Partners, became a minority shareholder in a newly formed company, Forbes Media, which encompasses Forbes magazine and Forbes.com, one of the. In 2005, the 339 companies on Forbes Forbes, Inc. is a privately held publishing and media company. Its flagship publication is Forbes, a bi-weekly magazine, with a circulation over 900,000. In August 2006, the private equity firm, Elevation Partners, became a minority shareholder in a newly formed company, Forbes Media, which encompasses Forbes magazine and Forbes.com, one of the' survey of closely held U.S. businesses sold a trillion dollars' worth of goods and services and employed 4 million people. In 2004, the Forbes' count of privately held U.S. businesses with at least $1 billion in revenue was 305.^[1]

Koch Industries Koch companies are involved in core industries such as commodities trading, petroleum, chemicals, energy, fiber, intermediates and polymers, minerals, fertilizers, pulp and paper, chemical technology equipment, ranching, finance, as well as other ventures and investments. In 2008, Forbes called it the second largest privately held company in the, Bechtel Bechtel Corporation is the largest engineering company in the United States, ranking as the 5th-largest privately owned company in the U.S. With headquarters in the Financial District of San Francisco, Bechtel had 44,000 employees as of 2009 working on projects in nearly 50 countries with $31.4 billion in revenue, Cargill Cargill, Incorporated is a privately held, multinational corporation, based in suburban Minneapolis, Minnesota in the United States. Founded in 1865, it is now the nation's largest privately held corporation . If publicly held, it would rank in the top 10 companies in the Fortune 500. Cargill's business operations include purchasing, processing,, Chrysler Chrysler Group LLC is a U.S.-based automobile manufacturer headquartered in the Detroit suburb of Auburn Hills, Michigan. Chrysler was first organized as the Chrysler Corporation in 1925. Up until 1998, Chrysler Corporation traded under the "C" symbol on the New York Stock Exchange, PricewaterhouseCoopers PricewaterhouseCoopers is one of the world's largest professional services firms and the largest of the Big Four auditing firms. It was formed in 1998 from a merger between Price Waterhouse and Coopers & Lybrand, both formed in London, Pilot Travel Centers Pilot Flying J is a chain of truck stops in the United States and Canada. The company is based in Knoxville, Tennessee where Pilot Corporation, the majority owner, is based. The company is owned by Pilot, FJ Management Inc., and CVC Capital Partners. The company operates truck stops under the Pilot Travel Centers and Flying J brands, Ernst & Young Ernst & Young is one of the largest professional services firms in the world and one of the Big Four auditors, along with PricewaterhouseCoopers (PwC), Deloitte and KPMG, Publix Publix Super Markets, Inc. is an American supermarket chain based in Lakeland, Florida, Deloitte Touche Tohmatsu Deloitte Touche Tohmatsu is one of the largest professional services organizations in the world and one of the Big Four auditors, along with PricewaterhouseCoopers, Ernst & Young, and KPMG and Mars Mars, Incorporated is a worldwide manufacturer of confectionery, pet food and other food products with US$21 billion in annual sales in 2008, and is ranked as the 6th largest privately-held company in the United States by Forbes. Headquartered in McLean, unincorporated Fairfax County, Virginia, USA, the company is entirely owned by the Mars family are among the largest privately held companies in the United States. IKEA IKEA is a privately held, international home products retailer that sells ready-to-assemble furniture, accessories, and bathroom and kitchen items in their retail stores around the world. The company, which pioneered flat-pack design furniture at affordable prices, is now the world's largest furniture retailer, Victorinox Victorinox is a knife manufacturer based in the town of Ibach, in the Canton of Schwyz, Switzerland. Since its acquisition of rival Wenger in 2005, it has, once more, become the sole supplier of multi-purpose knives to the Swiss army, and Bosch Robert Bosch GmbH is a technology-based corporation which was founded by Robert Bosch in Stuttgart, Germany in 1886 are examples of Europe's largest privately held companies.

State ownership vs. private ownership

In the broadest sense, the term private corporation refers to any business not owned by the state. This usage is often found in former Communist countries A communist state is a sovereign state with a form of government characterized by single-party rule or dominant-party rule of a communist party and a professed allegiance to a communist ideology as the guiding principle of the state to differentiate from former state-owned enterprises,^{[citation needed]} but it may be used anywhere when contrasting to a state-owned company.

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

In countries with public trading markets, a privately held business company is generally taken to mean one whose ownership shares In financial markets, a share is a unit of account for various financial instruments including stocks , and investments in limited partnerships, and REITs. The common feature of all these is equity participation (limited in the case of preference shares) or interests are not publicly traded A public company or publicly traded company is a company that has permission to offer its registered securities for sale to the general public, typically through a stock exchange, or occasionally a company whose stock is traded over the counter (OTC) via market makers who use non-exchange quotation services. 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 A small business is a business that is privately owned and operated, with a small number of employees and relatively low volume of sales. Small businesses are normally privately owned corporations, partnerships, or sole proprietorships. The legal definition of "small" varies by country and by industry. In the United States the Small are privately held. In the United States a few notable large corporations A corporation is an institution that is granted a charter recognizing it as a separate legal entity having its own privileges, and liabilities distinct from those of its members. There are many different forms of corporations, most of which are used to conduct business, such as Koch Industries Koch companies are involved in core industries such as commodities trading, petroleum, chemicals, energy, fiber, intermediates and polymers, minerals, fertilizers, pulp and paper, chemical technology equipment, ranching, finance, as well as other ventures and investments. In 2008, Forbes called it the second largest privately held company in the, HEB H.E. Butt Grocery Company is a privately held San Antonio, Texas-based supermarket chain with more than 315 stores throughout Texas and northern Mexico. The company also operates Central Market, an upscale organic and fine foods retailer, Cargill Cargill, Incorporated is a privately held, multinational corporation, based in suburban Minneapolis, Minnesota in the United States. Founded in 1865, it is now the nation's largest privately held corporation . If publicly held, it would rank in the top 10 companies in the Fortune 500. Cargill's business operations include purchasing, processing,, Swagelok Swagelok is a privately held international company, focusing on the manufacture and sale of gas and fluid systems components, such as compression fittings, valves, tubing, and gauges. It was founded in 1947 by Fred A. Lennon in Solon, Ohio, where its headquarters remain. It has an estimated 4,000 employees and $1.3 billion in annual revenue, with, Wegmans, Kohler The Kohler Company is a manufacturing company in Kohler, Wisconsin best known for its plumbing products. Kohler also manufactures furniture, cabinetry, tile, engines, and generators, Mars Mars, Incorporated is a worldwide manufacturer of confectionery, pet food and other food products with US$21 billion in annual sales in 2008, and is ranked as the 6th largest privately-held company in the United States by Forbes. Headquartered in McLean, unincorporated Fairfax County, Virginia, USA, the company is entirely owned by the Mars family, and Bechtel Bechtel Corporation is the largest engineering company in the United States, ranking as the 5th-largest privately owned company in the U.S. With headquarters in the Financial District of San Francisco, Bechtel had 44,000 employees as of 2009 working on projects in nearly 50 countries with $31.4 billion in revenue are privately held, as are large professional services Professional services are infrequent, technical, or unique functions performed by independent contractors or consultants whose occupation is the rendering of such services. Examples of professional services contracts include: accountants, actuaries, appraisers, architects, attorneys, brokerage firms, business consultants, business development firms, such as accounting and law firms.

Subsidiaries A subsidiary, in business matters, is an entity that is controlled by a separate higher entity[citation needed]. The controlled entity is called a company, corporation, or limited liability company; and in some cases can be a government or state-owned enterprise, and the controlling entity is called its parent . The reason for this distinction is and joint ventures The JV parties agree to create, for a finite time, a new entity and new assets by contributing equity. They then share in the revenues, expenses, and assets and "control" of the enterprise of publicly traded companies (for example, General Motors General Motors Company, also known as GM, is a United States-based automaker with headquarters in Detroit, Michigan. GM manufactures cars and trucks in 34 countries, recently employed 244,500 people around the world, and sells and services vehicles in some 140 countries. By sales, GM ranked as the largest US automaker and the world's second' Saturn Corporation Saturn Corporation is an automobile manufacturer and marque, established on January 7, 1985 as a subsidiary of General Motors in response to the success of Japanese automobile imports in the United States. The company marketed itself as a "different kind of car company," and operated somewhat independently from its parent company for a), unless shares in the subsidiary itself are traded directly, share characteristics of both privately held companies and publicly traded companies. Such companies are usually subject to the same reporting requirements as privately held companies, but their assets, liabilities and activities are also included in the reports of their parent companies, as required by the accountancy and securities industry rules relating to groups of companies.

Form of organization

Private companies may be called corporations A corporation is an institution that is granted a charter recognizing it as a separate legal entity having its own privileges, and liabilities distinct from those of its members. There are many different forms of corporations, most of which are used to conduct business, limited companies A limited company in the United Kingdom or Ireland is a corporation whose liability is limited by shares , which is the most common form of privately held company. Its equivalent in Australia is Proprietary company (Pty Ltd). Ltd in Australia would usually mean that a company with Ltd in the end of a company name would be listed on the ASX,, limited liability companies A limited liability company or, more rarely, a company with limited liability (WLL), is a flexible form of business enterprise that blends elements of partnership and corporate structures. It is a legal form of business company, in the law of the vast majority of United States jurisdictions, that provides limited liability to its owners. Often, or other names, depending on where and how they are organized. In the United States, but not generally in the United Kingdom, the term is also extended to partnerships A partnership is an arrangement where entities and/or individuals agree to cooperate to advance their interests. In the most frequent instance, a partnership is formed between one or more businesses in which partners co-labor to achieve and share profits or losses, sole proprietorships A sole proprietorship also known as a sole trader, or simply proprietorship is a type of business entity which is owned and run by one individual and where there is no legal distinction between the owner and the business. All profits and all losses accrue to the owner . All assets of the business are owned by the proprietor and all debts of the 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 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 A private company limited by shares, usually called a private limited company , is a type of company incorporated under the laws of England and Wales, Scotland, that of certain Commonwealth countries and the Republic of Ireland. It has shareholders with limited liability and its shares may not be offered to the general public, unlike those of in the United Kingdom (abbreviated Ltd) and the proprietary limited company A proprietary company is a form of corporation in Australia that is limited by shares. However, unlike a public company there are, depending on jurisdiction, restrictions on what they can and cannot do (abbreviated Pty Ltd) in Australia.

Reporting obligations and restrictions

Privately held companies generally have fewer or less comprehensive reporting requirements for transparency Transparency, as used in the humanities and in a social context more generally, implies openness, communication, and accountability. It is a metaphorical extension of the meaning a "transparent" object is one that can be seen through. Transparent procedures include open meetings, financial disclosure statements, the freedom of, via annual reports, etc. than do publicly traded companies. For example, in the United States, unlike in Europe, privately held companies are not generally required to publish their financial statements A financial statement is a formal record of the financial activities of a business, person, or other entity. In British English—including United Kingdom company law—a financial statement is often referred to as an account, although the term financial statement is also used, particularly by accountants. In Australia For at least 40,000 years before European settlement in the late 18th century, Australia was inhabited by indigenous Australians, who belonged to one or more of the roughly 250 language groups. After sporadic visits by fishermen from the immediate north and discovery by Dutch explorers in 1606, Australia's eastern half was claimed by Britain in 177, Part 2E of the Corporations Act 2001 requires that publicly traded companies file certain documents relating to their annual general meeting An annual general meeting is a meeting that official bodies, and associations involving the public (including companies with shareholders), are often required by law (or the constitution, charter, by-laws etc. governing the body) to hold. An AGM is held every year to elect the Board of Directors and inform their members of previous and future with the Australian Securities and Investments Commission The Australian Securities & Investments Commission is an independent Australian government body that acts as Australia's corporate regulator. ASIC's role is to enforce and regulate company and financial services laws to protect Australian consumers, investors and creditors, while there is no similar requirement for privately held companies.

Privately held companies also sometimes have restrictions on how many shareholders they may have. For example, the U.S. Securities Exchange Act of 1934, section 12(g), limits a privately held company, generally, to fewer than 500 shareholders, and the U.S. Investment Company Act of 1940, 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 fifty non-employee shareholders.

Privately-owned enterprise

A privately-owned enterprise refers to a commercial enterprise that is 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 contains a large private sector where privately-run businesses are the backbone of the economy is referred to as capitalism. This contrasts with socialism, where 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. The goal of private enterprise differs from other institutions, the major difference being private businesses exist solely to generate profit for the owners or shareholders.^[2]

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

Types of Privately-Owned Business

• 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 of 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 profit. Each partner has total and unlimited personal liability of the debts incurred by the partnership. There are three typical classifications of partnerships: general partnerships, limited partnerships, and limited liability partnerships.
• Corporation: A business corporation is a for-profit, limited liability entity that has a separate legal personality from its members. A corporation is owned by multiple shareholders and is overseen by a board of directors, which hires the business's managerial staff. Corporate models have also been applied to the state sector in the form of Government-owned corporations. A corporation may be privately held (that is, close - that is, held by a few people) or publicly traded.

Privately-owned businesses are typically divided into two subcategories: privately-held companies and publicly-traded companies. Publicly-traded firms list their shares on the stock market, allowing for more diversified ownership as anyone who purchases their stock becomes a partial owner and is able to receive a portion of its profit. Despite the term "public" in its name, a publicly-listed company does not entail public ownership because it is not owned by the whole society. It just means that shares of the company are for sale to anyone in the general public who wishes to purchase them. Publicly-listed corporations may be partially owned by governments.

Criticism

Criticism of private business has come from many perspectives, most notably socialist perspectives. Criticism of private property and privately-owned business is usually accompanied by criticism of the capitalist system entirely. Socialists often argue that within a capitalist system, economic activity is uncoordinated and serves the interest of a small business class as opposed to society as a whole. This results in stifled advancement and an 'anarchy of production'. Marxists criticize private business, along with capitalism, as being a form of exploitation that serves to extract the surplus value from the workforce and distribute it to passive owners (the capitalist class) in the form of profit. Because of this exploitation, the workers do not receive the full product of their labor and are forced, by the conditions imposed upon them by capitalism, to sell their labor to business owners in order to make a living.^[3] Socialists typically argue for public ownership of the means of production, with Marxian socialists advocating more direct collective worker-ownership of business enterprises with democratic worker management. Other critics of private property include technocrats, some forms of economic nationalism, anarchists and proponents of economic democracy, who believe power and economic decision-making should be spread among as many people as opposed to being concentrated into the hands of a few.

India

In India, the term private limited or in short PL is used after a name of a company which is privately held unlike public companies which use the word limited only.

See also

• Private company limited by shares (private limited company)
• Private equity
• Public company

References

1. ^ Forbes.com
2. ^ http://www.cato.org/special/ownership_society/boaz.html
3. ^ http://marxists.org/archive/marx/works/cw/index.htm

External links

• Forbes.com: America's Largest Private Companies
• Internationalbusinessreport.com, Examining the thoughts and opinions of privately held businesses

Categories: Privately held companies | Types of companies

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