A limited company is a type of business structure that has been incorporated at Companies House as a legal ‘person’. It is completely separate from its owners, it can enter into contracts in its own name and is responsible for its own actions, finances and liabilities. The owners of a company are protected by ‘limited liability’, which means they are only responsible for business debts up to the value of their investments or what they guarantee to the company.
A limited company must be registered at Companies House (UK registrar of companies) as ‘limited by shares’ or ‘limited by guarantee’. Limited by shares companies are owned by one or more shareholders and managed by one ore more directors. Limited by guarantee companies are owned by one or more guarantors and managed by one or more directors.
The same person can be the owner and director, so you can set up a company by yourself or with other people. There is no requirements to nationality or residency of the owners and directors.
Company limited by shares
A limited by shares company is the most popular company structure. It is designed for people who want to run a profit-making business and keep surplus income for themselves. You can set up a limited by shares company on your own or with other people. Each shareholder enjoys personal financial protection in the form of limited liability.
Separate legal entity that is responsible for its own income, assets, debts and liabilities.
- Most popular type of company for small to medium-sized companies.
- Owned by shareholders. These individuals buy shares in the company by investing money in the business. Each shareholder’s percentage of ownership depends on the number and value of the shares they own.
- The financial liability of shareholders is limited to the number and value of their shares. If a company is unable to pay its bills, shareholders are only required to contribute the nominal value of their shares.
- Profits are distributed to shareholders in relation to how much of the company they own. These profits are issued as dividend payments. It is also common to reinvest a percentage of profits in the business.
- Shareholders appoint directors to manage day-to-day business activities on their behalf. It is common for shareholders to appoint themselves as directors.
Company limited by guarantee
This type of company is most commonly used by people who want to set up a non-profit organisation or charity. The owners of this type of company usually reinvest surplus income in the business, rather than taking it for themselves.
- Separate legal entity that is responsible for its own income, assets, debts and liabilities.
- There are no shareholders because this type of company does not issue shares. Limited by guarantee companies are owned by individuals called ‘guarantors’.
- A guarantor’s personal liability is limited to a fixed amount of money called a ‘guarantee’. The guaranteed sum must be paid to the company if it can’t afford to pay its bills.
- Guarantors appoint directors to manage the day-to-day affairs of the company. It is commonplace for guarantors to appoint themselves as directors.
How to register a limited company in UK
Imperial & Legal offers a range of packages for incorporation of a company in the UK. Based on your requirements and circumstances we would be able to offer you the right package, either a standard or tailor-made, with a company registered within a day and Articles drafted especially for you.
To discuss your requirements, please contact our specialists or call us on +44 (0)203 490 41 21.