The companies and Allied Matters Act(CAMA) 1990, section 22(1) defines a private company as one which is stated in its memorandum to be a private company. Section 29(1) of CAMA 1990 states that the name of a private company limited by shares shall end with the word ''limited'' .
A private company may be established by members of a famil, group of individuals, formal business associates .
Members of a private company does not go more than 50 . The 50 persons or less does not include persons who are bona-fide in the employment of the company or were while in that employment and have continued after the determination of that employment to be members of the company. In effect, employees of the company are excluded . In occassions where three or more persons jointly subcribe for a share, irrespective of the number of persons involved they are counted as one persons .
Shares of private company are legally not transferable . Private companies are not given the authority to invite the public to subcribe for any shares or debentures of the company or deposit money for fixed periods or payable at all, whether interest generating or not. Their shares are not quoted on stock exchange markets .
The owners of private companies are known as shareholders. For a significant running of private companies, the shareholders usually elect a board of directors who subsequently executive directors for the day-to-day runningof the company.
The shareholders have no hand in the everyday affairs of the company.
The power of the shareholders is limited to their voting power which is normally determined by the number of share held by a member.
This implies that management is divorced from ownership. At the end of the financial year, the company sends its audited account to the shareholders.
Private companies may either be limited by share, unlimited or limited by guarantee.
There are various examples to this, which are:
ABC Transport Ltd, vanguard media Ltd, Newswatch communications Ltd, Diamond Bank Ltd, Zenith Bank, Equity Bank and many others .