Key benefits

Private Limited Companies are governed by the Companies Act 1985. A Private Limited Company is a legal entity in its own right; separate from those who run it, the Shareholders.

Key benefits

United Kingdom

Source image: UK Parliament by Michael D Beckwith / CC BY-SA 3.0

The limited liability, potential tax advantages and simplicity in running a private limited company make it the most common form of registered business in the UK. A Shareholders personal assets remain separate (unless they are secured against the business for borrowing) and your risk is reduced to only the money you have invested in the company and any shares you hold which you have not paid for.

There is no minimum capital requirement for a Private Limited Company. Private Limited Companies are required to have a minimum authorised share capital of £1 (or its currency equivalent) and are formed with both authorised and issued share capital. The minimum issued capital is one share but additional capital is usually issued to reflect the stability of the company. Unissued shares can be issued at any time by the Directors, subject to prior approval from the Shareholders. Shares in a Private Limited Company are transferred by private agreement between the seller and the buyer.

Key Benefits

UK Limited Companies have very few restrictions or requirements which makes them a simple yet flexible solution for many businesses.

The main requirements of a Private Limited Company are as follows:

  • A registered office is required.
  • One Director is required, the Director does not need to reside in the UK.
  • At least one Director must be an individual.
  • A Company Secretary is optional however it is advised to appoint a secretary at the registered office so all requirements can be easily fulfilled.

There are a number of advantages associated with a Private Limited Company. Some of these are as follows:

  • Limitation of Liability: This is the main advantage of a Private Limited Company. The company is a separate corporate body from the individual and liability for payment of the debt stops with the company.
  • Profit Distribution: Profits made by the company can be distributed to theShareholders in the form of dividends.
  • Ownership & Control: Private Limited Companies are flexible in their control and ownership and decisions can be made quickly and easily.
  • Separate Entity & Succession: Being a separate entity a Private Limited Company can benefit from continued existence and ownership can be easily transferred to another person.
  • Flexibility of Objectives: Because Private Limited Companies do not have to set the objectives for their business in the Memorandum of Association this leaves companies free to operate in many areas and markets.

Take the next step, we are here to help.

Register a UK LTD company.
Open a UK LTD bank account.

  Resources:

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