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Private Company Limited by Shares

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Why are certain business labelled as “limited companies”? A few of the reasons are:

  • It looks progressively Professional
  • Helps during the raising of external finance
  • More tax efficient than other corporate structures.

Under this company structure, the company and its finances are kept separate, unlike the structure of solo traders.

Corporate Taxation may be levied on Limited Company’s profits. If the annual company turnover is more than £85,000, the company must register for Value Added Tax (VAT).

The shareholders are the sole owners of Limited Companies. There isn't a necessity by law to have a company secretary but instead can function just one director and shareholder.

In the event of company failure, its directors and shareholders have 'limited liability' and their personal assets will be untouched. This isn’t the case with solo traders, whose personal liability is unlimited.

Public Limited companies can offer stocks for sale in the stock market, whereas this is not possible with Private Limited companies.

All limited companies must register themselves with the Companies House. They are required to submit an 'Annual Return', along with their annual accounts, to the Companies House on an annual basis.


Limited By Shares Company Formation

A private company limited by shares, usually called a private limited company (Ltd) (though this can theoretically also refer to a private company limited by guarantee), is a type of company incorporated under the laws of England and Wales, Scotland, that of certain Commonwealth countries and the Republic of Ireland. It has shareholders with limited liability and its shares may not be offered to the general public, unlike those of a public limited company (plc).

Limited Liabilities:

"Limited by shares" means that the company has shareholders, and that the liability of the shareholders to creditors of the company is limited to the capital originally invested, i.e. the nominal value of the shares and any premium paid in return for the issue of the shares by the company. A shareholder's personal assets are thereby protected in the event of the company's insolvency, but money invested in the company will be lost. Private companies limited by shares are usually required to have the suffix "Limited" (often written "Ltd" or "Ltd.") as part of their name. "Cyfyngedig" ("Cyf.") may be used by Welsh companies in a similar fashion.

Company officers:

Every company must have formally appointed company officers at all times. A limited company is owned by its shareholders. Limited companies are no longer required by law to have a company secretary. They can now operate with just one director and shareholder. Anybody can be a director, subject to certain exceptions. A person who is an undischarged bankrupt or who has been banned from being a company director by the court will also be restricted. Nor can a person be a director of a limited company if he or she is unable to consent to their appointment. From October 2008, all directors must be at least 16 years old. This change will be applied retrospectively, with any directors under the age of 16 being removed from the register (Companies Act 2006). No formal qualifications are required to be a company secretary. As of October 2008 (Companies Act 2006), it is no longer necessary to obtain a court order to withhold a director's address, as a Service Address can be supplied as well with the residential address being held as protected information at Companies House.


A company incorporated in England and Wales can be created with any number of shares of any value, in any currency. For example, there may be 10,000 shares with a nominal value of 1p, or 100 shares each of £1. In each case the share capital would be £100. Unissued shares can be issued at any time by the directors subject to prior authorisation by the shareholders. Shares in a private company are usually transferred by private agreement between the seller and the buyer, as shares in a private company may not by law be offered to the general public. A stock transfer form is required to register the transfer with the company. The articles of association of private companies often place restrictions on the transfer of shares.

Company accounts:

A company's first accounts must start on the day of incorporation. The first financial year must end on the accounting reference date. Subsequent accounts start on the day following the year-end date of the previous accounts. They end on the next accounting reference date or a date up to seven days either side. To help companies meet this filing requirement, Companies House send a pre-printed "shuttle" form to its registered office several weeks before the anniversary of incorporation. This will show the information that has already given to Companies House. If a company's accounts are delivered late there is an automatic penalty. This is between £100 and £1,000 for a private company.

Registered office:

Every company must have a registered office, which does not need to be its usual business address. It is sometimes the company's lawyers or accountants, for example. All official letters and documentation from the government departments (including Inland Revenue and Companies House) will be sent to this address, and it must be shown on all official company documentation. The registered office can be anywhere in England and Wales. If a company changes its registered office address after incorporation, the new address must be notified to Companies House.

Redundant companies:

Private companies that have not traded or otherwise carried on business for at least three months may apply to the Registrar to be struck off the register. Alternatively, the company may be voluntarily liquidated.

Converting to a public limited company:

A private company limited by shares and an unlimited company with a share capital may re-register as a public limited company (PLC). A private company must pass a special resolution that it be so re-registered and deliver a copy of the resolution together with an application form to the Registrar.

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