Limited companies exist as a separate legal entity to their owners, and this is often seen as an advantage because it means that any liabilities or debts belong to the company, not the people who own it. There are different types of limited company, with private companies and public ones being the two most commonly confused despite some major differences between the two.
Private companies which are limited by shares (the most common type)
Private companies which are limited by guarantee
Private unlimited companies
Public limited companies
How much share capital do I need to start a private or public limited company?
Both private and public limited companies are owned by shareholders who, quite literally, hold a ‘share’ in the business. When you register a company which is limited by shares (rather than by guarantee), you’ll need to supply information about who owns it, the number and type of shares in the business, and their total value (known as the company’s share capital).
For example, a company which issues 20 shares with a nominal value of £1 each will have a share capital of £20. It’s important to note that share capital is not linked to how much a company is worth.
A public limited company must have a minimum of £50,000 in share capital, although there’s no minimum requirement for private companies.
To incorporate a private limited company you must have at least one director and one shareholder, although these can be the same person – which is very common! This type of limited company doesn’t require a secretary (although you might still choose to appoint one, it’s up to you).
Can anyone be a director or a company secretary?
Company directors are responsible for managing the company, so it’s essential that they’re up for the job. By law, directors must be at least 16 or over, and not be disqualified from being a director. They don’t need to live in the UK, but the company itself will need to have a UK registered address.
The company secretary you appoint must also be capable of carrying out their duties. The GOV.UK site refers to a ‘qualified’ person, but this isn’t an actual qualification as such, and is more a reference to their having a decent level of knowledge and experience. Lots of companies appoint an accountant or legal representative for the role.
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How do I start a public or private limited company?
You can register the company yourself, our you can outsource it to an accountant, a solicitor, or an agent who deals specifically with company formations. Companies House also has an online incorporation service.
When can my limited company start trading?
A private limited company can start trading straight after incorporation, but public limited companies must wait for a trading certificate before starting to trade.
Do I need to tell people what sort of limited company it is?
Yes, you do indeed. Public companies must display ‘PLC’ after their name, and private limited companies normally need to include ‘limited’ or ‘ltd’. Some private companies might be exempt from this, for instance if the company is also a registered charity.
Do public and private limited companies both submit accounts?
Yes, limited companies are required to submit annual accounts, although the deadline for submitting them depends on what sort of limited company it is.
A public limited company must submit accounts within six months following its accounting year end
A private limited company can submit accounts up to nine months after the end of its accounting year
Does a limited company need to have an Annual General Meeting (AGM)?
Again, this depends on what sort of limited company it is. Private companies don’t need to schedule AGMs, but public limited companies (PLCs) do need to. The meeting must be held each year, and take place within 6 months of the day after the end of its accounting period.
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About The Author
I'm an experienced and fully AAT and ACCA qualified accountant, who is enthusiastic about helping business owners succeed. I also love cooking and needlepoint (at different times!). Learn more about Beth.