Legal Dictionary

limited company

Legal Definition of limited company

Related terms


Definition of limited company

Further reading

A limited company in the United Kingdom or Republic of Ireland is a corporation with shareholders whose liability is limited by shares (Ltd), which is the most common form of privately held company. Setting up as a limited company is an attractive option for many people as, unlike sole traders, personal assets are completely distinct from company finances.[1]

The private company equivalent in Australia is the Proprietary Limited company (Pty Ltd). An Australian company with just Limited or Ltd at the end of its name is a public company, such as a company listed on the ASX (although public companies can be, and often are, unlisted). Australia doesn't have a direct equivalent to the plc.

  • private company limited by guarantee
    This type of Company does not have share capital but is guaranteed by its "members", who agree to pay a fixed amount in the event of the company's liquidation. Frequently charities incorporate using this form of limited liability. Another example is the Financial Services Authority. In Australia only an unlisted public company can be limited by guarantee[2].
  • private company limited by shares
    It has shareholders with limited liability and its shares may not be offered to the general public.
  • public limited company (plc)
    Public limited companies can be publicly traded on a stock exchange � similar to the U.S. Corporation (Corp) and the German Aktiengesellschaft (AG).

A shareholder in a limited company, in the event of its becoming insolvent (equivalent to bankruptcy in the US) would be liable to contribute the amount remaining unpaid on the shares (usually zero, as most shares are issued fully paid). 'Paid' here relates to the amount paid to the company for the shares on first issue, and not to be confused with amounts paid by one shareholder to another to transfer ownership of shares between them. A shareholder is thus afforded limited liability.

A limited company can be registered in England and Wales, Scotland, Northern Ireland or Australia. The registration of companies in Great Britain (England, Scotland and Wales) is done through Companies House. Registration of companies in Australia is done through the Australian Securities and Investments Commission (ASIC)[3].

The registration of companies in Northern Ireland has been the responsibility of Department of Enterprise, Trade and Investment. From 1st October 2009 responsibility transfers to Companies House, under the Department for Business Enterprise and Regulatory Reform (BERR)[4].

Northern Ireland will retain a registry function and presence along similar lines to the Companies House Scotland model. This means that the office will remain in Belfast and we will retain the Registrar for Northern Ireland.

Equivalent constructs to limited companies can be found in most countries, although the detailed rules governing them vary widely. It is also common for a distinction to be made between the publicly tradable companies of "plc" type (like, for example, the German Aktiengesellschaft (AG), Czech a.s. and the Mexican, French and Polish S.A.), and the "private" types of company (such as the German GmbH, Polish Sp. z o.o. and the Czech s.r.o.).

References

  1. "Setting up a limited company - the basics," Constructaquote.com, http://www.constructaquote.com/home/business-guides/setting-up-a-limited-company--the-basics.aspx
  2. http://www.limitedcompany.com.au Types of limited and unlimited companies in Australia
  3. http://www.asic.gov.au
  4. http://www.companieshouse.gov.uk/companiesAct/niCompReg.shtml Northern Ireland Company Registry Integration

References:

  1. Wiktionary. Published under the Creative Commons Attribution/Share-Alike License.



SHARE THIS PAGE

TOP LEGAL TERMS THIS WEEK
1.     lex situs
2.     lex causae
3.     community service
4.     lex loci celebrationis
5.     lex loci delicti commissi
6.     lex domicilii
7.     adjudication order
8.     AORO
9.     Miranda warning
10.     lex patriae