A limited company in the United Kingdom is a corporation whose liability is limited by law. There are three main types of limited companies which are set up by the Memorandum of Association & Articles of Association:
- private company limited by shares (Ltd.)
- This is the most common form of business company. Its equivalent in Australia is Proprietary company (Pty. Ltd.).
- 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.
- public limited company (p.l.c.)
- 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. The registration of companies in Northern Ireland is done through the Department of Enterprise, Trade and Investment.
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 "p.l.c." type (like, for example, the German Aktiengesellschaft (AG) and the French and Polish S.A.), and the "private" types of company (such as the German GmbH and the Polish Sp. z o.o.).
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