In a limited company, the liability of members or subscribers of the company is limited to what they have invested or guaranteed to the company. Limited companies may be limited by shares or by guarantee. In a company limited by shares, the liability of members is limited to the unpaid value of shares. In a company limited by guarantee, the liability of owners is limited to such amount as the owners may undertake to contribute to the assets of the company, in the event of being wound up. The former may be further divided in public companies (public limited companies) and private companies (private limited companies). Who may become a member of a private limited company is restricted by law and by the company's rules. In contrast, anyone may buy shares in a public limited company.

Limited companies can be found in most countries, although the detailed rules governing them vary widely. It is also common for a distinction to be made between the publicly tradable companies of the plc type (for example, the German Aktiengesellschaft (AG), Dutch and Belgian nv, British PLC, Czech a.s., Italian S.p.A., Hungarian nyrt. and the Spanish, French, Polish, Greek and Romanian S.A.), and the "private" types of companies (such as the German GmbH, Dutch and Belgian bv, Portuguese Lda., British Ltd, Japanese G.K., Polish sp. z o.o., Russian ООО, Ukrainian ТОВ (TOV), the Czech s.r.o., the French s.à r.l., the Italian s.r.l., Romanian s.r.l., Hungarian kft., Bulgarian ДОО (DOO), Slovenian d.o.o., and Slovak s.r.o., in India Pvt Ltd for private company and Ltd for public company, in Singapore Pte Ltd for private company).

This is a company that does not have share capital, but is guaranteed by its members, who agree to pay a fixed amount in the event of the company's liquidation. Charitable organisations are often incorporated using this form of limited liability. Another example is the Financial Conduct Authority. In Australia, only an unlisted public company can be limited by guarantee.

Private companies limited by shares have shareholders with limited liability, and their shares are not permitted to be offered to the general public. Shareholders in such companies are typically obligated to first offer their shares to existing shareholders before considering selling them to external parties.^{[citation needed]}

A public limited company can be publicly traded on a stock exchange; this is similar to the U.S. Corporation (Corp.) and the German Aktiengesellschaft (AG).

The private company equivalent in Australia is the Proprietary Limited company (Pty Ltd). An Australian company with only Limited or Ltd after its name is a public company, such as a company listed on the ASX. Australia does not have a direct equivalent to the plc.

A shareholder in a limited company, in the event of its becoming insolvent (equivalent to insolvency in the United Kingdom) would be liable to contribute the amount remaining unpaid on the shares (usually zero, as most shares are issued fully paid). "Paid" here relates to the amount paid to the company for the shares on first issue, and should not be confused with amounts paid by one shareholder to another to transfer ownership of shares between them. A shareholder is thus afforded limited liability.

In Brazil, a limited company is registered as any other type of company. To register it, you must pay an accountant to research the name of your future business to check if it was not already registered, then the accountant contacts the offices responsible for giving you the CNPJ (the national code for company identification), which are the commercial joint of the state and the IRS. After that the Ltda. or Lda. (rarely used) suffixes can be placed after the companies name or with Cia. (abbreviation for companhia, company in Portuguese): [company name] & Cia. Ltda.