Private Limited (Ltd or LLP)
Private company limited by shares (Ltd)
This is the most common type of private limited company. The shareholders' liability
is limited to the amount of unpaid shares that they hold if the company is wound
up. A company only needs one shareholder. Shareholders can also be officers of
a company. That means that they can be a director and/or secretary of a company.
A company need only have one director as long as that sole director is not also
the company secretary.
Private company limited by guarantee (Ltd)
The members' liability is limited to the amount they have agreed to contribute
to the company's assets if wound up. The amount is agreed at the time of forming
the company. A company only needs one director, and one company secretary who
may or may not be a Director. (With effect from 22nd Dec 1980, a company cannot
be formed as, or become, a company limited by guarantee with a share capital)
Limited Liability Partnership (LLP)
This is a new form of business entity with limited liability. Two or more persons
can form an LLP. The LLP has the organisational flexibility of a conventional
partnership. It is also taxed as a partnership.
Advantages of limited companies and LLP's.
If a limited company should fail, there is less risk to personal assets.
The status of a company is commonly perceived to be higher.
Registration with Companies House protects the company name by law and prevents
anyone else trading with it.
The death or resignation of a director does not affect the structure of the
company and it can continue to trade as before.
Companies with a turnover below £350,000 do not need an audit, reducing
the cost of year-end accounts.
Disadvantages
More complex and costly start-up procedure.
If the turnover of the company is over £350,000, company accounts need
to be submitted every year. This can be costly as accountants and auditors are
required.
More formal and restrictive - you cannot exceed the powers granted to you by
the Articles of Association.
You will not normally be allowed to borrow money from your company.
Public Limited (PLC)
Public Company Limited by Shares (PLC)
The company's shares can be offered for sale to both the general public and
shareholders by floating the shares on the stock markets. Their liability is
limited to the amount unpaid on shares held by them. They must have a statutory
audit, and must have allotted shares to the value of at least £50,000.
Limited Liability Partnership (LLP)
The member's liability is limited to the amount they have agreed to contribute
to the company's assets if wound up. Many charities prefer to use this type
of company, as they wish to have limited liability but they do not want to raise
funds from the members.
Advantages
Often, the perception is that PLC's are larger, more established and more stable
than the Ltd companies.
Disadvantages
Ownership of listed companies can change very quickly. Other companies can mount
takeover bids by buying shares.
Formation is relatively complicated and expensive.
If it is a large PLC, effecting change can be difficult as there may be a lot
of people (shareholders) to consult and seek agreement from.
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