Privately held company

While they are often less well-known than their publicly traded counterparts, private companies still have major importance in the world's economy. For example, in 2008, the 441 largest private companies in the United States accounted for $1.8 trillion in revenues and employed 6.2 million people, according to Forbes.^[1]


Separately, all non-government-owned companies are considered private enterprises. That meaning includes both publicly traded and privately held companies since their investors are individuals.

State, private and cooperative ownership[edit]

Private ownership of productive assets differs from state ownership or collective ownership (as in worker-owned companies). This usage is often found in former Eastern Bloc countries to differentiate from former state-owned enterprises, but it may be used anywhere when contrasting to a state-owned or a collectively owned company.


In the United States, a privately held company refers to a business entity owned by private stakeholders, investors, or company founders, and its shares are not available for public purchase on stock exchanges. This contrasts with public companies, where shares are publicly traded, allowing anyone in the general public to invest.

Reporting obligations and restrictions[edit]

Privately held companies generally have fewer or less comprehensive reporting requirements and obligations for transparency, via annual reports, etc. than publicly traded companies do. For example, in the United States, privately held companies are not generally required to publish their financial statements. By not being required to disclose details about their operations and financial outlook, private companies are not forced to disclose information that may potentially be valuable to competitors and can avoid the immediate erosion of customer and stakeholder confidence in the event of financial duress. Further, with limited reporting requirements and shareholder expectations, private firms are afforded a greater operational flexibility by being able to focus on long-term growth rather than quarterly earnings. In addition, private company executives may steer their ships without shareholder approval, allowing them to take significant action without delays.^[4][5] In Australia, Part 2E of the Corporations Act 2001 requires that publicly traded companies file certain documents relating to their annual general meeting with the Australian Securities and Investments Commission (ASIC). There is a similar requirement for large proprietary companies, which are required to lodge Form 388H to the ASIC containing their financial report. In the United States, private companies are held to different accounting auditing standards than public companies, overseen by the Private Company Counsel division of the Financial Accounting Standards Board.^{(see external links)}


Researching private companies and private companies' financials in the United States can involve contacting the secretary of state for the state of incorporation (or for LLC or partnership, state of formation), or using specialized private company databases such as Dun & Bradstreet. Other companies, like Sageworks, provide aggregated data on privately held companies, segmented by industry code.^[6] By contrast, in the United Kingdom, all incorporated companies are registered centrally with Companies House.^[7]


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 2000 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.