What is a limited company 2017?
What is a limited company
In a limited company, the liability of members or subscribers of the company is limited to what they have invested or guaranteed to the company. Limited companies may be limited by shares or by guarantee. The former may be further divided into public companies and private companies. Who may become a member of a private limited company is restricted by law and by the company’s rules. In contrast, anyone may buy shares in a public limited company.
Every limited company has ‘members’ – the people or organisations who own shares in the company.
Directors are responsible for running the company. Directors often own shares, but they don’t have to.
There are many legal responsibilities involved with being a director and running a limited company.
Private company limited by guarantee
This is a company that does not have share capital, but is guaranteed by its members, who agree to pay a fixed amount in the event of the company’s liquidation. Charitable organisations are often incorporated using this form of limited liability. Another example is the Financial Conduct Authority.
Has shareholders with limited liability and its shares may not be offered to the general public. Shareholders of private companies limited by shares are often bound to offer the shares to their fellow shareholders prior to selling them to a third party.
Public limited company
A public limited company can be publicly traded on a stock exchange;