A private company limited by shares is a class of

private limited company A private limited company is any type of business entity in "private" ownership used in many jurisdictions, in contrast to a publicly listed company, with some differences from country to country. Examples include the '' LLC'' in the United St ...

incorporated under the laws of

England and Wales England and Wales () is one of the three legal jurisdictions of the United Kingdom. It covers the constituent countries England and Wales and was formed by the Laws in Wales Acts 1535 and 1542. The substantive law of the jurisdiction is Engl ...

Northern Ireland Northern Ireland ( ga, Tuaisceart Éireann ; sco, label= Ulster-Scots, Norlin Airlann) is a part of the United Kingdom, situated in the north-east of the island of Ireland, that is variously described as a country, province or region. Nort ...

Scotland Scotland (, ) is a country that is part of the United Kingdom. Covering the northern third of the island of Great Britain, mainland Scotland has a border with England to the southeast and is otherwise surrounded by the Atlantic Ocean to th ...

, certain

Commonwealth countries The Commonwealth of Nations is a voluntary association of 56 sovereign states. Most of them were British colonies or dependencies of those colonies. No one government in the Commonwealth exercises power over the others, as is the case in a ...

, and the

Republic of Ireland Ireland ( ga, Éire ), also known as the Republic of Ireland (), is a country in north-western Europe consisting of 26 of the 32 counties of the island of Ireland. The capital and largest city is Dublin, on the eastern side of the island. ...

. It has

shareholders A shareholder (in the United States often referred to as stockholder) of a corporation is an individual or legal entity (such as another corporation, a body politic, a trust or partnership) that is registered by the corporation as the legal ow ...

with

limited liability Limited liability is a legal status in which a person's financial liability is limited to a fixed sum, most commonly the value of a person's investment in a corporation, company or partnership. If a company that provides limited liability to it ...

and its

shares In financial markets, a share is a unit of equity ownership in the capital stock of a corporation, and can refer to units of mutual funds, limited partnerships, and real estate investment trusts. Share capital refers to all of the shares of an ...

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 under United Kingdom company law, some Commonwealth jurisdictions, and the Republic of Ireland. It is a limited liability company whose shares may be freel ...

. "Limited by shares" means that the liability of the shareholders to

creditors A creditor or lender is a party (e.g., person, organization, company, or government) that has a claim on the services of a second party. It is a person or institution to whom money is owed. The first party, in general, has provided some property ...

of the company is limited to the capital originally invested, i.e. the

nominal value In economics, nominal value is measured in terms of money, whereas real value is measured against goods or services. A real value is one which has been adjusted for inflation, enabling comparison of quantities as if the prices of goods had no ...

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 Disclosure may refer to: Arts and media * ''Disclosure'' (The Gathering album), 2012 *Disclosure (band), a UK-based garage/electronic duo * ''Disclosure'' (novel), 1994 novel written by Michael Crichton ** ''Disclosure'' (1994 film), an American ...

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 where stockbrokers and traders can buy and sell securities, such as shares of stock, bonds and other financial instruments. Stock exchanges may also provide facilities for the ...

. This is the major difference between a private limited company and a

. 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, is a country in Europe, off the north-western coast of the continental mainland. It comprises England, Scotland, Wales and Nor ...

, 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, administrative assistant, executive assistant, administrative officer, administrative support specialist, clerk, military assistant, management assistant, office secretary, or personal assistant is a w ...

. The company's

articles of association In corporate governance, a company's articles of association (AoA, called articles of incorporation in some jurisdictions) is a document which, along with the memorandum of association (in cases where it exists) form the company's constituti ...

may require more than one director. At least one director must be an

individual An individual is that which exists as a distinct entity. Individuality (or self-hood) is the state or quality of being an individual; particularly (in the case of humans) of being a person unique from other people and possessing one's own need ...

, 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 ...

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 which forms the primary source of UK company law. The Act was brought into force in stages, with the final provision being commenced on 1 October 2009. It largely ...

. This was already the case in Scotland, under the

Age of Legal Capacity (Scotland) Act 1991 The Age of Legal Capacity (Scotland) Act 1991 (c.50) is an Act of the Parliament of the United Kingdom applicable only in Scotland. It replaced the pre-existing rule of pupillage and minority with a simpler rule that a person has full legal ca ...

. 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 The subscription business model is a business model in which a customer must pay a recurring price at regular intervals for access to a product or service. The model was pioneered by publishers of books and periodicals in the 17th century, a ...

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 (

§ 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 A fiscal year (or financial year, or sometimes budget year) is used in government accounting, which varies between countries, and for budget purposes. It is also used for financial reporting by businesses and other organizations. Laws in many ju ...

, 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 executive agency of the company registrars of the United Kingdom, falling under the remit of the Department for Business, Energy and Industrial Strategy. All forms of companies (as permitted by the Companies Act) are in ...

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

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. 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 company, association or any other legal entity. Generally it will form part of the public record and is required in most countries where the registered organization or legal entity ...

, 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

*The memorandum of association 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

and

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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 The Companies Registration Office (CRO; ga, An Oifig um Chlárú Cuideachtaí) registers and incorporates companies in Ireland and files their annual returns. The CRO has a number of core functions: *The incorporation of companies. *The receipt ...

in the

, or the

Registrar of Companies A company register is a register of organizations in the jurisdiction they operate under. A statistical business register has a different purpose than a company register. While a commercial/trade register serves a purpose of protection, accounta ...

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

(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.

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 Majesty's Stationery Office (HMSO) and of other public information services of the United Kingdom. The OPSI is part of the National Archives of the Un ...

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