Business, Legal & Accounting Glossary
Registered companies that are ‘limited by shares’ are the most common form of registered company. Prior to 1985, it was possible to register a company limited by guarantee (see: Limited by guarantee), but this is no longer possible.
In a company limited by shares, members of the company (usually designated ‘directors’) are liable for the company’s debts only to the extent of the value of the shares they own. Registering a company as limited prevents the directors being made destitute if the company fails, but this peace of mind comes at a price: corporation tax.
Companies limited by shares may be public or private. A public limited company is allowed to offer shares to sale to the public. This is a good way for the company to raise capital, but the option is only open to companies with a share capital of £50,000 or more. A private limited company must have at least two shareholders, but there are few other restrictions on their formation.
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This glossary post was last updated: 6th April, 2020 | 1 Views.