This Practice Note summarises the main features of a private company limited by shares. It also covers key differences with public companies limited by shares, and why a private company limited by shares might be chosen as a preferred business vehicle instead of another form of UK company.
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 five million registered limited companies on the Companies House public register, over 95% of which are private companies limited by shares.
The other types of UK company available under the CA 2006 are:
- •
public companies limited by shares—see Practice Note: Public companies limited by shares
- •
private companies
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Jurisdiction(s):
United Kingdom
Related legal acts:
Key definition:
Shares definition
What does Shares mean?
The CA 2006 merely provides that a share is a share in the company's share capital. A company's share capital comprises the number of shares issued by it to investors either on or after incorporation. Those investors then become the shareholders in the company. A shareholder’s shares are their personal property. By contrast, the assets of a company are owned by the company itself. Owning shares does not entitle a shareholder to any property rights in the company's assets.
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