Jurisdiction(s):
United Kingdom

Related legal acts

Key definition

Company limited by shares definition

What does Company limited by shares mean? In practice, a company limited by shares is the standard corporate vehicle in the UK and Ireland in which shareholders’ financial risk is capped at any amount unpaid on their shares. This statutory category is recognised in the Companies Act 2006 (UK) and the Companies Act 2014 (Ireland), which provide that members’ liability is limited to sums not yet paid for the shares they hold. Where shares are fully paid, members have no further liability to contribute to the company’s debts. Key features include a share capital divided into shares, ownership by shareholders and management by directors, and...

UK Company Incorporation under the Companies Act 2006: formation, naming, PSCs, officers, articles, share capital, filings, public/guarantee requirements and initial post-incorporation steps

Published by a LexisNexis Corporate expert

Practice notes

This Practice Note looks at the principal considerations and steps when establishing a company limited by shares or by guarantee.

What is a company?

A company is a business vehicle that exists as a separate legal entity, distinct from its members. It is owned by its members and run by its directors. It is governed by the Companies Act 2006 (CA 2006).

Companies are widely used; more than 5 million are on the UK public register maintained by companies house.

Under the CA 2006, the following company types are available:

Public or private companies limited by shares — see Practice Notes: Private companies limited by shares and Public companies limited by shares
Private companies limited by guarantee (primarily used by charities and other not-for-profit organisations — see Practice Note: Companies limited by guarantee)
Unlimited companies (comparatively uncommon — see Practice Note: Unlimited companies)

For details on other business vehicles, see Practice Note: Forms of business vehicle — fundamentals.

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