← Lessons 02-Business and Company Law
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Law of Contract Sole Traders Partnerships Limited Liability Partnerships — LLP Limited Companies Public Limited Company — PLC Private Limited Company Company Formation & Registration Certificate of Incorporation Private Company → Public Company Company Registers Company Accounts Share Capital Directors Company Secretary Auditors Annual General Meetings — AGM Proxies Company Reports People with Significant Control — PSC Winding Up / Liquidation Liquidator's Duties Bankruptcy ⭐ Key Exam Numbers to Remember

Limited Companies

Basic Concept

  • A limited company is funded by shareholders/members.
  • Shareholders' liability is limited to amounts:
    • Paid on their shares, and/or
    • Payable on their shares.
  • A company has its own separate legal personality.
  • It is legally separate from its individual members.
  • A company can:
    • Employ people.
    • Own property.
    • Enter contracts.
    • Be sued for civil-law breaches.

Advantages

  • Limited liability protects shareholders' personal property.
  • Allows expansion by raising money through shares.
  • Can provide a stronger business identity/credibility.
  • Tax treatment may sometimes be beneficial compared with personal taxation.

Disadvantages

  • Company accounts must be submitted to the Registrar of Companies.
  • Business information is therefore publicly available.

Two Main Types

  • Private Limited Company
  • Public Limited Company (plc)