Limited Company

What Is Limited Company?

A private company whose owners are legally responsible for its debts only to the extent of the amount of capital that they invested.

Who Can Set Up A Limited Company?

Anyone who is 16 years of age or above and who does not appear in the registry at Companies House (the Registrar of Companies) as a disqualified director.

Since October 2006, limited companies may be opened by a single person as the requirement is that there is one company director and shareholder. This does not need to be a separate entity, it can be the same person, so the director of the company can be the sole shareholder.

Shareholders Responsibility & Capital

If a person wants to set up their own limited company they need to set up shares. A company only requires one shareholder of the value of one pound.

This means that the shareholder in effect, only owns one pounds worth of the limited company. The company shareholder is a separate entity to the limited company.


You can set up a private limited company to run your business.

All limited companies must be registered (incorporated) with Companies House. To do this you need:

  • A company name.
  • An address for the company.
  • At least one director.
  • At least one shareholder.
  • A Memorandum of Association – which is an agreement of all initial shareholders to create a company.
  • A Statement of Capital – which shows details of the company’s shares and the rights attached to them.
  • Articles of Association – which are written rules about how the company is run.

Once the company is registered with Companies House you will receive a ‘Certificate of Incorporation’. This confirms that the company legally exists and shows the company number and date of formation.

Types Of Limited Company

The liability for debts in a limited company is usually limited to the funds of the shareholders but it also depends on the type of limited company you create.

Limited By Shares

A private company limited by shares is owned by its members – the shareholders. Each member is liable for the original value of the shares they were issued, so in most cases for smaller companies, this is a pound as there is only one shareholder.

Limited By Guarantee

A private company limited by guarantee means the members of the company financially back it up to a certain agreed amount. Its members are not called shareholders.

Unlimited Company

An unlimited company means that the liabilities to the shareholders are unlimited, so the shareholders take full responsibility of the financial burden of the company, paying all liabilities if the company becomes insolvent.

Registering Your Company

You can register your company a number of ways. These include:

  • Online
  • By post using the form IN01
  • Using an agent
  • Using third-party software

Company Directors

Your company must have at least one director who must be 16 or over and not disqualified from being a director. A list of disqualified directors can be found on the Companies House website.

A director is legally responsible for running a company and making sure the companies accounts and reports are done properly. Directors names and addresses are publicly available from Companies House.

Shares & Shareholders

A company limited by shares must have at least one shareholder which can be a director, there is no maximum number of shareholders. Shareholders are owners of the company and they have certain rights; directors may need shareholders to vote and agree changes to the company.

When you register a company you’ll need to make a ‘statement of capital’. This includes:

  • The number of shares of each type that the company has and their total value- known as the company’s ‘share capital’
  • The names and addresses of all shareholders

Your statement of capital also contains information about shares known as ‘prescribed particulars’