This guide explains the basic process of private limited company shares and shareholders. Check the workings of a company limited by shares and how to issue a 'statement of capital'.
As a rule, it is the shareholders who would own a company that is 'limited by shares'.
As such, they would have certain rights granted to them for owning a percentage of shares in that particular company.
It is commonplace for company directors to need a vote and agreement from shareholders to make changes to the company.
Directors must report certain changes. Check a list of company changes you must report to Companies House.
In most cases, a private limited company issues 'ordinary' shares to its shareholders. As such, the directors would get one vote per share on company decisions.
As a rule, they would also receive dividend payments based on any profits made by the private limited company.
There has to be at least one (1) shareholder in any company 'limited by shares'. The same person can also be a director of the company if there is only one shareholder.
Being the only shareholder means you would own 100% of the company. There is no upper limit to the number of shareholders that a company can have.
There are no restrictions on the price of an individual share. They can be of any value. But, shareholders must pay for their shares in full if the private limited company was to shut down.
Note: You can limit the liability of company shareholders to a reasonable amount. For example, choosing a low share value of £1 per share would reduce the financial risk.
You must provide certain information about the shares when you register your company. A 'statement of capital' provides the share details. Thus, as part of issuing your initial shares you must provide information on:
An Example: If a private limited company issues 300 shares at £2 each it would have a share capital of £600.
You must also provide information on what rights each type of share gives to the shareholder. Thus, information on the 'class' and 'prescribed particulars' must include:
Appoint Directors and a Secretary | The legal process of appointing directors and company secretaries.
Memorandum and Articles of Association | How memorandum of association and 'model articles' work.
Private Limited Company Shares and Shareholders in United Kingdom