There are different types of limited company available for incorporation. Choose the one that best suit your business venture. Companies House is the governing body for companies incorporated in the United Kingdom.
Companies House do not provide advice which type of company is suitable for your business. Normally, they would advise you to seek professional advice. You may incorporate your company through a company formation agent or a solicitor or an accountant.
Private company limited by shares
Firstly, you may incorporate a private limited company limited by shares. This type of company has a share capital divided into shares which are issued to shareholders. Besides, the liability of each shareholder is limited. In the event of winding up, the shareholder’s liability is limited up to the amount (if any) unpaid on their shares.
This type of company cannot offer its shares for sale to the general public unless upgrade status to a public limited company.
In addition, you must submit company accounts and confirmation statement with Companies House.
Private company limited by guarantee
Secondly, you may incorporate a private company limited by guarantee. Charity likes to use this type of incorporation. Fundamentally, this type of company does not have a share capital and its members are guarantors rather than shareholders. Concurrently, the liability of its members is limited to the amount they agree to contribute to the event of the company being wound up.
Private unlimited company
Thirdly, you may set up a private unlimited company. This type of company may or may not have a share capital. Furthermore, there is no limit to the members’ liability because the members’ liability is unlimited. On the other hand, the company is also subject to less disclosure requirements than other types of company.
Public limited company
Fourthly, you may incorporate a public limited company. This type of company is similar to that of a private company limited by shares. That you have a share capital and limited liability for your shareholders. Correspondingly, your shareholder’s liability is also limited to the amount unpaid on their shares.
The main benefit of a public limited company is that you may offer your shares for sale to the general public. For example, your shares may also quoted on the stock exchange.
For this reason, a public limited company is subject to more rigorous compliance requirements. You also have to comply the Financial Conduct Authority (FCA) rules in addition to Companies House requirements.
Your public limited company must meet the minimum of share capital requirement of, currently at £50,000. Also, before you start trading, you must apply for a trading certificate with Companies House. Whereas, the share capital requirement for a private company can be as little as £1.
Usually, you may incorporate a private company limited by shares initially then upgrade your company status. You may upgrade your status through re-registration from a private company to a public company. Companies House would administer your re-registration application.
Subsequently, if you would like to be able to offer your company shares to the public, you must comply with the admission to stock exchange rules.
On the other hand, you must also have your company accounts audited. Preferably, your accounts with an unqualified audit report every year. In addition, your company account filing deadline is 6 months after your financial year-end.
Community Interest Companies (CIC)
Lastly, you may incorporate a Community Interest Companies (CIC) as a private or a public limited company. The CIC is a type of limited company designed for people who want to conduct a business or other activity for community benefit. In other words, It is not purely for the benefits of the shareholders of the company.