Types of Company
It is important to distinguish between public and private sector organisations,
as they will have very different characteristics and objectives.
The Public Sector
These organisations are financed by the state and they do not operate in order
to make a profit but to provide a public service. Examples of public sector
organisations are schools, hospitals, libraries, police and the national defence.
The Private Sector
These organisations operate in order to make a profit and are split into 2 categories:
This type of company can be set up with relatively few formalities. It can be
either a sole trader or partnership and the owner(s) will be personally liable
for all of the debts if the business fails. There is no legal requirement for
non-limited companies to make any of their financial information public. Non-limited
companies are generally referred to as "businesses".
Limited companies can be either privately owned when they are referred to as
Limited (often abbreviated to Ltd) or publicly owned (Plc). Some Plc's can sell
shares to members of the public on the stock exchange, unlike Ltd's that cannot.
The liability for both Ltd's and Plc is limited. This means that if the company
fails, the liability of the company's shareholders is limited to the value of
the shares and not their personal funds. Or, in the case of companies limited
by guarantee (with no share capital) the liability of its members is limited
to the amount their members wish to contribute to the assets of a company in
the event of it being wound up. Note that for limited companies, the term in
the commercial world to use is "company". All Limited companies are
legally required to submit Company Accounts and Annual Returns every year. These
documents are filed at an executive agency of the Department of Trade and Industry
(DTI) called Companies House. This information is available to the public. A
limited company has similar rights to a person; for example it can buy assets,
own property, and it can sue or be sued independently of its directors. It can
have detrimental information registered against it too.