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A private company limited by shares is a class of
private limited company A private limited company is any type of business entity in Privately held company, "private" ownership used in many jurisdictions, in contrast to a Public company, publicly listed company, with some differences from country to country. Examples ...
incorporated under the laws of
England and Wales England and Wales () is a legal jurisdiction covering England and Wales, two of the four countries of the United Kingdom, parts of the United Kingdom. England and Wales forms the constitutional successor to the former Kingdom of England and follows ...
,
Northern Ireland Northern Ireland ( ga, Tuaisceart Éireann ; sco, label= Ulster-Scots, Norlin Airlann) is a part of the United Kingdom The United Kingdom of Great Britain and Northern Ireland, commonly known as the United Kingdom (UK) or Britain,Usa ...
,
Scotland Scotland ( sco, Scotland, gd, Alba ) is a country that is part of the United Kingdom The United Kingdom of Great Britain and Northern Ireland, commonly known as the United Kingdom (UK) or Britain,Usage is mixed. The Guardian' and Tele ...
, certain
Commonwealth countries The Commonwealth of Nations The Commonwealth of Nations, generally known simply as the Commonwealth, is a political association of 54 member states, almost all of which are former territorial evolution of the British Empire, territories of ...

Commonwealth countries
, and the
Republic of Ireland Ireland ( ga, Éire ), also known as the Republic of Ireland ('), is a in north-western consisting of 26 of the 32 of the island of . The capital and largest city is , on the eastern side of the island. Around 40% of the country's popula ...

Republic of Ireland
. It has
shareholders A shareholder (in the United States often referred to as stockholder) of a corporation A corporation is an organization—usually a group of people or a company—authorized by the State (polity), state to act as a single entity (a legal en ...
with
limited liability Limited liability is a legal status where a person's financial liability Liability may refer to: Law * Legal liability, in both civil and criminal law ** Public liability, part of the law of tort which focuses on civil wrongs ** Product liabi ...
and its
shares In financial markets A financial market is a market in which people trade financial securities and derivatives at low transaction costs. Some of the securities include stocks and bonds, raw materials and precious metals, which are known ...
may not be offered to the general public, unlike those of a
public limited company A public limited company (legally abbreviated to PLC or plc) is a type of public company A public company, publicly traded company, publicly held company, publicly listed company, or public limited company is a whose ownership is organized ...
. "Limited by shares" means that the liability of the shareholders to
creditors A creditor or lender is a party 300px, '' Hip, Hip, Hurrah!'' (1888) by Peder Severin Krøyer, a painting portraying an artists' party in 19th century Denmark A party is a gathering of people who have been invited by a host A host is ...
of the company is limited to the
capital Capital most commonly refers to: * Capital letter Letter case (or just case) is the distinction between the letters that are in larger uppercase or capitals (or more formally ''majuscule'') and smaller lowercase (or more formally ''minusc ...
originally invested, i.e. the
nominal value In economics Economics () is the social science that studies how people interact with value; in particular, the Production (economics), production, distribution (economics), distribution, and Consumption (economics), consumption of goods ...
of the shares and any premium paid in return for the issue of the shares by the company. A shareholder's personal assets are thus protected in the event of the company's insolvency, but any money invested in the company may be lost. A limited company may be "private" or "public". A private limited company's disclosure requirements are lighter, but its shares may not be offered to the general public and therefore cannot be traded on a public
stock exchange A stock exchange, securities exchange, or bourse is an Exchange (organized market), exchange where stockbrokers and stock trader, traders can buy and sell security (finance), securities, such as share (finance), shares of stock, Bond (finance), ...
. This is the major difference between a private limited company and a
public limited company A public limited company (legally abbreviated to PLC or plc) is a type of public company A public company, publicly traded company, publicly held company, publicly listed company, or public limited company is a whose ownership is organized ...
. Most companies, particularly small companies, are private.


Company officers

In the
United Kingdom The United Kingdom of Great Britain and Northern Ireland, commonly known as the United Kingdom (UK) or Britain,Usage is mixed. The Guardian' and Telegraph' use Britain as a synonym for the United Kingdom. Some prefer to use Britain as shorth ...

United Kingdom
, every company must have formally appointed company officers. By statute, a private company must have at least one director and until April 2008 also had to have a
secretary A secretary, administrative professional, or personal assistant A personal assistant, also referred to as personal aide (PA) or personal secretary (PS), is a job title describing a person who assists a specific person with their daily busine ...
. The company's
articles of association In corporate governance Corporate governance is the collection of mechanisms, processes and relations used by various parties to control and to operate a corporation. Governance structures and principles identify the distribution of rights ...
may require more than one director. At least one director must be an
individual An individual is that which exists as a distinct entity Entity may refer to: Computing * Character entity reference, replacement text for a character in HTML or XML * Entity class, a thing of interest within an entity–relationship model or d ...
, not another company. Anybody can be a director, subject to certain exceptions. A person who is yet to be discharged from
bankruptcy Bankruptcy is a legal process through which people or other entities who cannot repay debts to creditors may seek relief from some or all of their debts. In most jurisdictions, bankruptcy is imposed by a court order, often initiated by the debto ...

bankruptcy
or who has been banned from being a company director by the court will be prohibited, except in certain cases. For example, if the bankrupted person had requested details of share transactions because there was sufficient equity within the business/es that had not been dealt with sufficiently by the court, they are technically not bankrupt and are permitted to start a company. In addition, natural persons must have the legal capacity to consent to their appointment as director of a limited company. As of October 2008, the minimum age required to give this consent is 16 years of age. This change was applied retroactively, with any directors under the age of 16 being removed from the register upon the implementation of the
Companies Act 2006 The Companies Act 2006 (c 46) is an Act of the Parliament of the United Kingdom The Parliament of the United Kingdom is the of the , the and the . It alone possesses and thereby ultimate power over all other political bodies in the ...
. This was already the case in Scotland, under the Age of Legal Capacity (Scotland) Act 1991. No formal qualifications are required to be a company director or secretary, but the company must comply with many laws and regulations, regardless of such qualifications or the lack of them. Certain non-British nationals are restricted as to the work they may undertake in the UK, depending upon their visas, work permits, national insurance payments center location and tax details, training, English language and professional indemnity insurances. 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.


Share capital

When a limited company is formed it must issue one or more subscriber shares to its initial members. It may increase capitalisation by issue of further shares. The issued share capital of the company is the total number of shares existing in the company multiplied by the nominal value of each share. A company incorporated in England and Wales can be created with any number of shares of any nominal value, expressed in any currency. For example, there may be 10,000 shares with a nominal value of 1p, or 100 shares of £1 each. In each case the share capital would be £100. Unissued shares can be issued at any time by the directors using a Form SH01 - Return of Allotment of Shares (
Companies Act 2006 The Companies Act 2006 (c 46) is an Act of the Parliament of the United Kingdom The Parliament of the United Kingdom is the of the , the and the . It alone possesses and thereby ultimate power over all other political bodies in the ...
§ 555) subject to prior authorisation by the shareholders. Transfers of shares in a private company usually occur by private agreement between the seller and the buyer, as they may not 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, or a date up to seven days either side of this 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. If a company's accounts are delivered late there is an automatic penalty which is between £150 and £1,500 for a private company. The first accounts of a private company must be delivered: *within nine months of the end of the accounting reference period; or *if the accounting reference period is more than 12 months, within 22 months of the date of incorporation, or three months from the end of the accounting reference period, whichever is longer. A company may change its accounting reference date by sending Form 225 to the Registrar.


Confirmation statement (previously the annual return)

Every limited company must file annually a confirmation statement, which confirms that its information at
Companies House Companies House is the United Kingdom's registrar of companies and is an executive agency and trading fund of Government of the United Kingdom, Her Majesty's Government, falling under the remit of the Department for Business, Energy and Industri ...
is correct. To help companies meet this filing requirement, Companies House may send a pre-printed "shuttle" form to each company's registered office several weeks before the anniversary of incorporation. The form shows the information that has already been given to Companies House. Companies House may also send an email reminder on the due date (annual review period date). This statement must be filed no later than 14 days after the due date, and can be filed online using a Companies House service.


Company Tax Return

A private company limited by shares must also file for every financial year a Tax Return with
HMRC , type = Non-ministerial government department Non-ministerial government departments (NMGDs) are a type of Departments of the Government of the United Kingdom, department of the Government of the United Kingdom that deal with matters for which ...
. By using a government online service, this can be done at the same time as delivering the accounts to Companies House. The deadline for delivering the return is 12 months after the accounting period ends.


Registered office

Every company must have a
registered office A registered office is the official address of an incorporated Incorporated may refer to: * Incorporated community * Incorporated (Grip Inc. album), ''Incorporated'' (Grip Inc. album), 2004, by Grip Inc. * Incorporated (Legion of Doom album), '' ...
, which does not need to be its usual business address; it is often the address of the company's lawyers or accountants. All official letters and documents from government departments (including HMRC and Companies House) will be sent to this address, which must be shown on all official company documents. The registered office can be anywhere in England and Wales, or Scotland if the company is registered there.


Formation

To incorporate a company in the UK, the following documents, together with the registration fee (£10-£40), must be sent to the Registrar of Companies: *Form IN01 *The
articles of association In corporate governance Corporate governance is the collection of mechanisms, processes and relations used by various parties to control and to operate a corporation. Governance structures and principles identify the distribution of rights ...
*The
memorandum of association The memorandum of association of a company is an important corporate document in certain jurisdictions. It is often simply referred to as the memorandum. In the UK, it has to be filed with the Registrar of Companies during the process of incorpo ...
The memorandum of association states the name of the company, the registered office and the company objectives. The objective of a company may simply be stated as being to carry out business as a general commercial company. The memorandum delivered to the Registrar must be signed by each subscriber in front of a witness who must attest the signature. The articles of association govern the company's internal affairs. The company's articles delivered to the Registrar must be signed by each subscriber in front of a witness who must attest the signature. Form IN01 states the first directors, the first secretary, and the address of the registered office. Each director must give his or her name, address, date of birth, and occupation. Each officer appointed, and each subscriber (or their agent), must sign and date the form. Applications may also be submitted directly to
Companies House Companies House is the United Kingdom's registrar of companies and is an executive agency and trading fund of Government of the United Kingdom, Her Majesty's Government, falling under the remit of the Department for Business, Energy and Industri ...
and
HMRC , type = Non-ministerial government department Non-ministerial government departments (NMGDs) are a type of Departments of the Government of the United Kingdom, department of the Government of the United Kingdom that deal with matters for which ...
online via th
GOV.UK website
for £12. In other jurisdictions companies must make similar applications to the relevant registrar, such as the Companies Registration Office, Ireland in the
Republic of Ireland Ireland ( ga, Éire ), also known as the Republic of Ireland ('), is a in north-western consisting of 26 of the 32 of the island of . The capital and largest city is , on the eastern side of the island. Around 40% of the country's popula ...

Republic of Ireland
, or the
Registrar of Companies A registrar of companies is a public authority which is responsible for managing a companies register. Botswana Companies and Intellectual Property Authority is responsible for registering companies in Botswana. Canada The Director General ...
in India.


Additional information


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, or an unlimited company with a share capital, may re-register as a
public limited company A public limited company (legally abbreviated to PLC or plc) is a type of public company A public company, publicly traded company, publicly held company, publicly listed company, or public limited company is a whose ownership is organized ...
(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 43(3)(e) to the Registrar.


See also

*
Private company limited by guarantee In British, Irish and Australian company law Corporate law (also known as business law or enterprise law or sometimes company law) is the body of law governing the rights, relations, and conduct of persons, companies, organizations and ...
*
Privately held company A privately held company or private company is a company which does not offer or trade its company stock In finance, stock (also capital stock) consists of all of the shares In financial markets A financial market is a market in which ...
*
Limited liability company A limited liability company (LLC) is the US-specific form of a private limited company A private limited company is any type of business entity in Privately held company, "private" ownership used in many jurisdictions, in contrast to a Publ ...
(LLC) *
Gesellschaft mit beschränkter Haftung A ''Gesellschaft mit beschränkter Haftung'' (, abbreviated GmbH and also GesmbH in Austria), meaning "company with limited liability", is a type of legal entity In law, a legal person is any person A person (plural people or persons) is a ...
(GmbH) *
Aktiengesellschaft (; abbreviated AG, ) is a German word for a corporation A corporation is an organization—usually a group of people or a company—authorized by the State (polity), state to act as a single entity (a legal entity recognized by private ...
(AG)/others


References

{{reflist


External links


Companies Act 2006
Office of Public Sector Information The Office of Public Sector Information (OPSI) is the body responsible for the operation of His/Her Majesty's Stationery Office (HMSO) and of other public information services of the United Kingdom The United Kingdom of Great Britain and Nor ...
. Types of business entity fr:Société en commandite par actions it:Società in accomandita per azioni hu:Részvénytársaság sl:Družba z omejeno odgovornostjo sr:Друштво са ограниченом одговорношћу