The different types of Limited Companies
Many people will know about Limited Companies and how to set them up etc, but not many people know that there are numerous different types of companies out there and each one is very different from the other. So today I thought I’d write a quick blog just defining the different types and outline what each one is. Before we get started I just wanted to quickly add (just in case some people weren’t sure) that a ‘Limited Company’ is its own corporate entity which is owned by other people who are ‘limited’ to their personal liability of that company.
Private Limited Company – Limited by Shares (Ltd.)
A company owned by private shareholders who’s liability/responsibility of the company is limited by their initial percentage of capital invested in the company. So if a shareholder invested 30% of the capital, then that shareholder is only liable for 30% of all debts, legal liabilities and responsibilities etc. Because this is a ‘Private’ Limited Company, this means the shares cannot be offered to the public and are purely owned by private shareholders.
Examples of Ltd. Companies:
- Virgin Atlantic
- JCB
- New Look
Private Limited Company – Limited by Guarantee (LBG)
This type of setup is primarily used by non-profit organisations since there are no shareholders or capital in the company, instead you have ‘members’ who act as guarantors for the company and may invest charitable donations into the business to help keep it running. Things like sports clubs and associations are good examples of companies ‘Limited by Guarantee’.
Examples of LBG Companies:
- Oxfam
- Bupa
- PGA European Tour
Limited Liability Partnership (LLP)
This is similar to the ‘Limited by Shares’ type of company, but instead of shareholders owning part of your company you have partners each owning part of the company. The difference here is that the amount of liability/responsibility of each partner isn’t based upon their initial capital invested, instead the company is equally shared out and divided between the amount of partners in the company. For example, if 2 people went into an LLP together, they would each be liable for 50% of the company, no matter what their initial capital investment was in the company. This is more designed for a company who wants to have partners working together instead of shareholders who only own shares of the company and don’t necessarily work for the company.
Examples of LLP Companies:
- Ernst & Young (E&Y)
- Deloitte & Touche
- Cooper Christensen Law Firm
Public Limited Company (PLC)
This type of company allows its shares to be owned, sold and freely traded to the general public. You can either be listed or unlisted on the Stock Exchange, but you will tend to find them listed on there which allows the public to easily buy and sell their shares. There are 2 guidelines which must be adhered to when setting up a PLC in the UK, firstly the share of the company you’re offering to the public must be a minimum of £50,000 and once you are set up you must always put ‘PLC’ after your company name so it is clear that you are a publicly owned company.
Examples of PLC Companies:
- BP
- Barclays
- Marks & Spencer Group
Private Unlimited Company
This is quite a rare type of company and is a hybrid company which is set up much alike a Limited Company however the shareholders/members all have the ‘unlimited’ liability of the company, no matter how many shareholders there or or what capital they invested etc. Every member is equally responsible for all of the liabilities and responsibilities of the company. So why would anyone want this type of company right? Well it’s usually set up by companies who want to keep some form of secrecy since they don’t have to submit any annual returns or financial statements like other all other companies.
Examples of Unlimited Companies:
- GlaxoSmithKline Services
- Credit Suisse International
- C. Hoare & Co
I hope that helps and if you want anymore information just contact me at info@zlogg.co.uk
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