Types of company
1. Private Companies
There is no statutory minimum or maximum capital for a
private company. It is now possible to set up a company
with only one member and for that member to have only one
share, but this is exceptional. There must be at least two
people involved in running a company. The company's articles
may require that there are at least two directors, but if
this is not the case and there is just one director, a separate
person must be appointed secretary.
Private Limited companies can be registered with varying
Memorandum and Articles of Association so that a company
can be used as:
- An ordinary trading company with power to engage in
any legal commercial activity.
- A Flat Management company with specially written objects
that enable it to carry on the business of the management
of shared domestic or commercial property.
- A company limited by guarantee with specially written
objects that establishes it for charitable purposes and
not to make any distribution to members. Many of these
types of company exist and a good example are the many
Enterprise Trusts whose objects are generally constructed
so that they offer support to the self employed. These
companies do not have any share capital, rather there
exists a guarantee that members will contribute a fixed
amount (usually £1) should the company go into liquidation.
2. Public Companies
The key difference between public and private companies
is that a public company may offer to sell its shares to
the public. It may be quoted on the Stock Exchange or the
Alternative Investment Market, but does not have to be.
Out of 13,000 public companies registered in Great Britain
only 2,100 are quoted on the London Stock Exchange.
Before it can start business or borrow money, a public company
must satisfy Companies House that at least £50,000 worth
of shares have been issued and that each share has been
paid up to at least a quarter of its face value. It will
then receive an authorisation to commence business and to
borrow. A public company must have at least two directors
and a suitably qualified secretary. It will have a name
ending in Public Limited Company or PLC.
3. Unlimited Companies
While all public companies and most private companies have
limited liability, it is possible to set up an unlimited
company although the incidence of this is extremely rare.
This would not have Limited at the end of its name and would
not normally be required to produce accounts for public
inspection. If an unlimited company were unable to pay its
creditors, the members of the company would be liable for
the full amount of any debt.
4. Limited Liability Partnerships
In order for business partners to have the benefit of limited
liability a partnership can be incorporated. This enables
the problems of joint and several liability that apply to
all members of an ordinary partnership to be avoided. There
are no shares in an LLP and arrangements for taxing the
income of individual partners are the same as for an ordinary
partnership.
A partnership deed will be required setting out the 'constitution
of the partnership and on request we can supply a copy FREE
of charge
A Companies Constitution
Every company has a Memorandum of Association (except for
an LLP), which determines its name, where its registered
office may be situated and what it may do (its objects).
The rules for the conduct of the company's internal affairs
are contained in its Articles of Association. There is a
standard form for the articles (in the case of a company
limited by shares known as Table A), but this may be modified.
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