Private company limited by shares

Okay, imagine you and your friends are running a lemonade stand. You each put some money in to start the stand and you're all sharing the profits at the end of the day. That's kind of like a private company - a group of people who are working together to make money.

Now let's say you want to make things a little more official. You decide to form a company, which means you need to make some rules and agreements about how you're going to run the business. You might decide that each person gets a certain number of shares, which means they own a piece of the company.

So if there are four of you and you decide to split the company into 100 shares, each of you might get 25 shares. That means you each own 25% of the company.

Now, let's say you're all still making lemonade but you're starting to sell a lot more. You might need to buy some more supplies, like cups and lemons, which costs money. That's where the "limited" part comes in. The company has a certain amount of money that it can spend on these things, and it's limited to that amount.

But you also want to make sure that everyone is protected - you don't want one person to be responsible for all the debts if the company can't pay its bills. That's why the "limited liability" part is important. If the company owes money to someone, each person is only responsible for their share of the debt.

So, a private company limited by shares is a group of people who own a piece of the business and are sharing the profits. The company has a set amount of money it can spend, and each person is only responsible for their share of any debt the company incurs.