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A basic description and how do you get one?
Many small and medium size businesses operate as a Limited Company. A private Limited Company is similar in many respects to a Public Limited Company (plc). The majority of plc's are quoted on the Stock Exchange but a plc is any company registered as such. A plc has to comply with more regulations than a private Limited Company.
A Limited Company issues shares, generally for cash. Ordinary Shares normally carry the rights to vote and control the company. Preference Shares are another type of share, which receive a fixed rate dividend before the Ordinary Shares.
A Limited Company can have a large Share Capital to fund its activities, or it may only issue one £1 share, and fund its activities with a loan or loans from the Shareholder(s). Share Capital is not normally repaid and is last to be repaid in a winding-up. By contrast a loan can be repaid whenever the company can afford to do so.
A Limited Company is a legal "person" in its own right. The Limited Company trades in its own right and has its own "life". It is not like a Partnership where each Partner is liable for the Partnership debts. The liability of the Shareholders is (in theory) limited to Share Capital they have agreed to subscribe. Directors are not liable for the debts of the company, but they can be liable for their negligence in dealing with company affairs.
Although shareholders have the benefit of limited liability by trading through a company, banks and other lenders may require a personal guarantee before agreeing lending facilities. If a personal guarantee is given, liability to other creditors would remain limited, but personal assets will be at risk to the lender.
The shareholders appoint the directors and secretary of the company, and can remove them (subject to employment regulations). The shareholders therefore have control of the company.
A company can be formed from scratch or acquired as a ready made company. There are restrictions in the names a company can use. We can obtain a Limited Company for you from Company Registration Agents.
Some Company Registration Agents (in alphabetical order) -
See also Share Valuations.
Reminder - disclaimer applies. Please feedback your comments. This page was last modified 18 May 2002.