Company (UK)

3 key takeaways

• A company in the UK is a separate legal entity from its owners.
• Companies must be registered with Companies House and comply with the Companies Act.
• There are different types of companies, such as private limited companies (Ltd) and public limited companies (PLC).

What is a Company (UK)?

A company in the UK is a business entity that is legally separate from its owners and is formed under the Companies Act. It has its own legal rights and responsibilities, can enter into contracts, own property, sue and be sued. The most common types of companies in the UK are private limited companies (Ltd) and public limited companies (PLC). Companies must be registered with Companies House, the UK’s registrar of companies, and adhere to statutory requirements and regulations.

Importance of a Company (UK)

• Limited Liability: Owners’ liability is limited to their investment in the company.
• Separate Legal Entity: The company has its own legal identity, distinct from its owners.
• Access to Capital: Companies can raise capital through the sale of shares (PLC) or other financial instruments.

How a Company (UK) Works

Formation and Registration

• Incorporation: To form a company, it must be registered with Companies House. The registration process involves submitting the necessary documents, including the Memorandum and Articles of Association, and paying a registration fee.
• Memorandum of Association: A legal statement signed by all initial shareholders agreeing to form the company.
• Articles of Association: A document outlining the rules for the company’s operations and governance.

Types of Companies

• Private Limited Company (Ltd): Owned by shareholders who are not publicly traded. Limited liability protection is provided, and there is no minimum capital requirement.
• Public Limited Company (PLC): Can offer shares to the public and must have a minimum share capital of £50,000. Shares are usually traded on a stock exchange.
• Limited Liability Partnership (LLP): Combines elements of partnerships and companies, offering limited liability to partners.

Compliance and Governance

• Directors: Companies must have at least one director (two for a PLC), responsible for managing the company.
• Company Secretary: A PLC is required to appoint a company secretary to ensure compliance with statutory and regulatory requirements.
• Annual Returns and Accounts: Companies must file annual returns and financial statements with Companies House.

Examples of Companies (UK)

• Private Limited Company (Ltd): A small family-owned business, where shares are held privately and not traded on the stock market.
• Public Limited Company (PLC): Large corporations like Tesco PLC or Barclays PLC, where shares are available to the public and traded on the London Stock Exchange.
• Limited Liability Partnership (LLP): Professional services firms like law firms or accounting firms, offering limited liability to partners.

Real-world Application

• Business Operations: Companies in the UK operate across various sectors, contributing significantly to the economy.
• Investment Opportunities: PLCs provide opportunities for public investment through the stock market.
• Legal Framework: The structure and governance of companies in the UK ensure a regulated environment, protecting investors and stakeholders.