Types of UK Companies

UK companies are a common form of business entity in the UK for carrying out some trade of other venture.

The main types of company are: private and public limited and unlimited companies. Those which fall in to the private category can be further divided in types which are limited by guarantee and those by shares.

All of the above types of business entity are incorporated by Companies House.

The latter type, private companies limited by shares are by far the most common form of registered entity in the UK.

Private Companies Limited by Shares

This type of business is a traditional trading entity. It is owned by shareholders and is run by at least one director.

Whilst the specific activities which this type of company will be engaged in will vary, businesses adopting this structure are usually engaged in some form of profit seeking enterprise.

Private Companies Limited by Guarantee

Private companies limited by guarantee are not for profit organisations such as charities and societies.

They have members rather than shareholders and would not be permitted to distribute excess income to them. Any surpluses would be retained for future activities and given back to the original source if no such projects were available.

The object clauses of a company limited by guarantee are usually far more specific than those of a business limited by shares.

In many cases, such entities are set up with a particular purpose in mind and thus stating these objectives might ensure that the actual activities do not deviate from this stated reason.


Public Limited Companies PLCs

Public limited companies are usually larger business entities engaged in some trading activity with the view of making a profit.

A company seeking a listing on the London Stock Exchange must be a PLC before admission can be granted.

Minimum Share Capital Requirements

A public limited company have minimum share capital requirement which must be met before Companies House will incorporate the company.

The rules are that there must be at least £50,000 worth of shares issued on incorporation with at least £12,500 paid up.

Because of the necessity to deposit this sum of money with the company up on registration, the number of this type of entity which are formed in the UK are fewer than for private companies which do not require any initial deposits.


Unlimited Companies

Unlimited companies are those which are incorporated without limited liability. This type of business entity is extremely rare in the UK.

One situation where an unlimited company might be appropriate is where individuals essentially require a partnership business, but wish to avoid the time and expenses involved in drafting a detailed agreement.

The share distribution (and the rights which each confers) available through a company might be preferable.