Frequently Asked Questions

What is a limited company?
A company of any type is a separate legal person, or legal entity, created by incorporation at Companies House (a government agency). Any profits, losses, assets and liabilities belong to the company. A company is owned by its shareholders (members) and run the its director (or directors) whose personal assets are protected from loss if the business should fail. Any liability is limited to the amount unpaid, if any, on shares that have been issued. Because a company has a life of its own the business can continue despite the resignation, or death, of any directors or shareholders and the sale of the business or introduction of outside investors is simplified. Reasons for wanting or needing a limited company may include ownership of property, obtaining outside finance, status and protection from risk. A limited company may have just one director and one shareholder. A company may be a director of another company but every company must have at least one director who is a person.

What is a plc company?
A plc or public limited company may offer shares for sale on the Stock Exchange or Unlisted Securities Market if required. A public limited company must have at least two directors, two shareholders and a suitably qualified company secretary. Before a plc company can trade it must obtain a certificate to trade from Companies House confirming that it has the required minimum allotted share capital.

What is a company limited by guarantee?
A private company limited by guarantee does not have shares and its members each guarantee to contribute (usually just £1.00 each) in the event of the company being wound up. This type of company is normally used for "not for profit" organisations.

What is a llp?
A llp is a form of legal entity with limited liability for the members which is very similar to a private limited company but it is taxed as a partnership.

A minimum of two members is required and at least two members must be designated members. A designated member is responsible for ensuring that all required annual documents are correctly filed at Companies House by the due date.

Detailed descriptions of regulations can be found in The Limited Liability Partnerships Act 2000 and The Limited Liability Partnerships Regulations 2009.

Can anyone be a company director?
There are no restrictions regarding the nationality or residency of company directors. A person may not be a director if they are disqualified from acting as a company director, if they are an undischarged bankrupt (there are exceptions to this) or if they are under 16 years old.

Because we use electronic filing services directors do not need to sign paper forms or visit our offices.

Choosing a company name
A company name may not imply an untrue connection with any Government Department, institution or professional body, it must not be misleading in any way and it must not be too similar to the name of any existing company. When considering similarity common words, abbreviations and symbols are ignored.

Disclaimer
These brief notes cannot give a complete summary of company law. Further information can be obtained at the Companies House website, from a solicitor or from a chartered accountant.