If you are considering setting up a limited company, it is important to be fully informed about this type of business structure and the steps you will need to take to establish your company. Our team of commercial solicitors provide specialist advice on all the legal aspects (and practical aspects) of company formation. If you would like to discuss your business plans with our lawyers, get in touch today.
What is a limited company?
A limited company is its own legal entity meaning that it trades under its company name and is separate from the directors or shareholders. It is the company that enters into contracts with suppliers and customers. Shareholders and directors are, therefore, not responsible for the debts of the company (unless the shareholder/director has guaranteed the company’s loans and debts i.e. a personal guarantee). As business services solicitors, we are able to advise our clients on how this works in practice.
A limited company offers business owners limited liability and protection, and they are increasingly used by start-up businesses who want to raise finance by way of investment in their business.
A limited company can take one of two forms:
- Company limited by shares – this is the most common form of company used by businesses, however if your business is a non-profit making business, a more suitable limited company structure would be company limited by guarantee.
- Company limited by guarantee – here members (instead of shareholders) have a limited amount that they would contribute if the company was wound up – normally this is limited to £1.00 each.
A limited company will need a memorandum of association and articles of association. These are its constitutional documents and they govern how the company in very brief terms is to be run. While most companies can be set up with a standard set of articles of association, as business services solicitors we are able to provide bespoke articles of association from the date you set up business.
How do you register a limited company?
All limited companies must be registered at Companies House. To do this, you need to first decide the following:
- The company name. When choosing a company name, there are certain legal requirements to be followed and our commercial solicitors can assist you in ensuring that they are met.
- The registered office. It is usually the case that the registered office is the premises from which the company trades, but it can also be your accountant’s or home address. You must check with your mortgage lender if you wish to use your home address as a registered office.
- The director(s). A company will need at least one director over the age of 16 and one shareholder but there is no longer a statutory requirement to have a company secretary.
- The shareholder(s). A shareholder must contribute the amount unpaid on their shares; but no more if a company goes into liquidation. In the vast majority of cases, the shares will be fully paid, so that no contribution towards the company’s debts has to be made. However, a shareholder will lose their shares and, therefore, their investment if the company fails. If there is more than one shareholder then it is highly recommended to look at drawing up and entering into a Shareholders’ Agreement.
Other forms of company
There are other forms of company that you may wish to consider. A private unlimited company has no share capital and its liability is not limited, which has the added advantage of being more flexible as there is no need to file an annual return at Companies House. However, they are a rare form of company.
Another is a public limited company, also known as a PLC. This is a company where members of the public can purchase shares in the company. Some PLCs are listed on the stock market.
It can be difficult to know which form of company is right for you. That is where our business solicitors can help. Our highly qualified and experienced business advisers are known for their expert, pragmatic and clear advice that aims to help you further your commercial ambitions.
Contact our Business Solicitors Sheffield
The business lawyers at Ironmonger Curtis are based in Sheffield and serve clients in Rotherham, Chesterfield, Barnsley, Dronfield and further afield. Call us on 0845 225 2635 to find out how we can help or fill in our online contact form and we will get back to you shortly.