Private companies limited by shares

The following Corporate practice note provides comprehensive and up to date legal information covering:

  • Private companies limited by shares
  • What is a private company limited by shares?
  • Limited liability
  • Members
  • Role of members and nature of membership
  • Admission of members
  • Transfer of shares
  • Company constitution
  • Directors
  • Meetings, voting and other administrative matters
  • More...

Private companies limited by shares

What is a private company limited by shares?

A private company limited by shares is a legal entity which is separate and distinct from its members. It is owned by its members who hold shares in the company. It is managed by its directors in line with the provisions of the Companies Act 2006 (CA 2006) and the company’s governing constitutional document, otherwise known as the articles of association.

The company is a very commonly used business vehicle; there are over four million registered UK companies on the Companies House public register, and over 95% of those companies are private companies limited by shares.

The other types of UK company available under the CA 2006 are:

  1. public companies limited by shares—see Practice Note: Public companies limited by shares

  2. private companies limited by guarantee, which are primarily used by charities and other not-for-profit organisations—see Practice Note: Companies limited by guarantee, and

  3. unlimited companies, which are relatively rare—see Practice Note: Unlimited companies

There are also other forms of UK company that are not regulated, or are only partly regulated, under CA 2006. They are:

  1. unregistered companies—see Practice Note: Unregistered companies, and

  2. community benefit companies—see Practice Note: Community interest companies

Limited liability

CA 2006 provides that a company is a ‘limited company’ if the liability of its members is limited by its constitution. It may be limited by shares

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