1. The liability of its members is limited to the extent of their shares in the paid-up capital of the company. These companies may further be classified as public limited and private limited companies.

2. Public Limited Companies can be formed by at least seven persons by subscribing their names to the ‘Memorandum and Articles of Association’ of the company. The word ‘Limited’ is used as the last word of its name.

3. Private Limited Companies may be formed by at least two persons by subscribing their names to the ‘Memorandum and Articles of Association’ of the company.

A private limited company, by its Articles of Association:

i. Restricts the right to transfer its shares;
ii. Limits the number of its members to fifty; and;
iii. Prohibits any invitation to the public to subscribe for shares or debentures of the company.

4. A private limited company is required to use the words “(Private) Limited” as the last words of its name.