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Limited Liability Companies

Limited Liability Company

In business you never really know exactly when success will knock at your door. But if you take the right steps, have the right attitude and incorporate with the right type of legal structure, Limited Liability Company formation can be very rewarding. We are a Government approved company formation agents to authorised to provide company registration services.

The Importance of a Limited Liability Company Formation

With EU membership and international business, ways of doing business in the UK have become more diverse. For example, your Limited Liability Company may not only supply the local market; your Limited Liability Company may be supplying its goods or services to other EU countries, or acting as an agent that imports goods into the UK. Online sales are also a major part of trade and you may register a Limited Liability Company to start an ecommerce business.

For your potential customer, Limited Liability incorporation is a sign of planning.

Types of Limited Liability Companies

In the UK there are four types of limited companies. These are:

Their difference in name of each ltd. company suggests their distinct features. Other forms of business set-ups such as the Sole Trader and General Partnership are not called ‘companies’ because they are not legal entities.

The Limited Liability Partnership is a relatively new business structure (entity), introduced in 2000, which can be used alongside a UK limited liability company.

Below is a table showing the main features of a Limited Liability Company, General Partnership, Limited Liability Partnership and Sole Trader

Limited Company / Other Structures Main Distinguishing Features
Private Company limited by shares
  • Only 1 member needed for limited liability company incorporation
  • liability limited to amount on unpaid shares (if any)
  • Issues shares
  • Legally distinct/separate from members
  • Managed by Board of Directors
Private Company limited by guarantee
  • Only 1 member needed for limited liability company incorporation
  • Members serve as guarantors and contribute to the company’s assets in the event of winding-up
  • Legally distinct/separate from owners/members
  • Does not issue shares
Private Unlimited Company
  • Liability of members is unlimited
Public Limited Company
  • Authorised to sell shares to general public
  • May be listed on stock exchange after limited liability company formation
  • Liability limited to value of unpaid shares of each member
  • May or may not have share capital for limited liability company registration
General Partnership
  • Requires 2 partners to be registered
  • Debts are the personal responsibility of partners, unlike ltd. company
Limited Liability Partnership
  • Limited liability partnerships and a ltd. company can be a partner
  • Rights and responsibilities depend on type of partner
Sole Trader (Sole Proprietorship)
  • Owner has unlimited liability, unlike a Ltd. company Least government regulated
  • Does not undergo formation procedures unlike a Ltd. company
  • Not legally distinct/separate from owner
  • Profits taxed as income

Limited Liability Company (UK) Advantages

The main advantages of a Limited Liability Company are that in the UK, Limited Liability Company (registration):

Is a simple way to protect personal assets, unlike a Sole Trader, the Limited Liability Company does not tie your personal assets to the company. A Limited liability Company in the UK limits liability to the total value of unpaid shares.

Is a ‘person’ with its own identity, as such a UK Limited Liability Company can open bank accounts, invest, purchase property etc. in its name as a Limited Liability Company.

Has a standard structure that the international business community is familiar with. The Limited Liability Company is a credible and trusted business structure.

Has an organised management structure comprising the board of directors, secretaries (optional) and shareholders who manage and own the Limited Liability Company respectively, and are a prerequisite for Limited Liability Company formation.

Can accumulate capital quickly by issuing shares upon formation and any time after formation.

Is a flexible structure with the potential for growth, changes can be made after Limited Liability Company registration to the company name, capital and membership.

Has continuity and can only cease to exist if liquidated, terminated, or struck off the Register after Limited Liability incorporation.

Limited Liability Company Formation

The requirements for Limited Liability Company registration are as straightforward as follows:

Documents Memorandum of Association; Articles of Association; Application form IN01; Any other relevant information for limited liability company formation
Director One or more (must be an individual if there is only one member) for limited liability company incorporation
Shareholder One or more (can be same person who is the director )
Share Capital GBP 1 (GBP 1,000 recommended)

UK Limited Liability Companies Officers

The officers of a limited liability company are integral to its overall management and success. Directors, shareholders and a secretary (optional) are the main officers in a limited company and will be required for Limited Liability Company incorporation.

Basically, the board of directors in a UK limited liability company are responsible for the company’s overall strategic planning to ensure long-term sustainability, to establish policies aimed at maximising shareholder wealth, and the safeguard of the assets in the limited company.

UK law does not make it mandatory for a “Ltd.” company to appoint a secretary. We recommend a secretary since certain administrative duties can be delegated to him/her by the directors so that more focus can be placed on managing your limited liability company.

The responsibilities of secretaries in a Limited Liability Company according to the Companies Act 2006 are the same as those stated for directors under the same Act. They include:

You are unable to be a director in a UK Limited Liability Company if you are:

Limited Company Meetings

Unlike Public Companies and Private Companies with traded shares, a Private Limited Company is not required to have an annual general meeting. If at least 5% of the shareholders of a Limited Liability Company UK call for an AGM, a notice has to be issued within 14 days.

Ordinary meetings can be called throughout the financial year by the directors of the Ltd. company. The minimum period for issuing a notice is 14 days.

Limited Liability Company Records

The private limited company is by law required to record the minutes of every meeting. Since this task is usually undertaken by a secretary, appointing one would relieve the directors.

Official records that a UK Limited Liability Company is required to maintain are:

Minutes of Meetings

If changes are made after Limited Liability Company registration you must inform Companies House within 14 days.

by Elena Genovese