Limited by shares

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Registered companes that are 'limited by shares' are the most common form of registed company. Prior to 1985 it was possible to register a company limited by guarantee (see: Limited by guarantee), but this is no longer possible.

In a company limited by shares, members of the company (usually designated 'directors') are liable for the company's debts only to the extent of the value of the shares they own. Registering a company as limited prevents the directors being made destitute if the company fails, but this peace of mind comes at a price: corporation tax.

Companies limited by shares may be public or private. A public limited company is allowed to offer shares to sale to the public. This is a good way for the company to raise capital, but the option is only open to companies with an share capital of £50,000 or more. A private limited company must have at least two shareholders, but there are few other restrictions on their formation.

UK LAW