Company Limited by Shares: Explanation
A company limited by shares is a joint-stock company where shareholders' liability is equal to their investment. It can be a private or public company.
- Private companies have a maximum of fifty shareholders, do not publicly offer shares, and restrict share transfer.
- Public companies need at least seven shareholders, publicly offer shares, and allow free share transfer.
Advantages of a Company Limited by Shares
Here are some advantages of a company limited by shares:
- Limited Liability: Shareholders cannot be held liable for debts beyond their investment.
- Shareholder Control: Shareholders can elect the board of directors, influencing company operations.
- Financial Stake and Incentives: Shareholders are incentivized to ensure company success due to their financial stake.
- Capital Generation: These companies can raise capital by selling shares, funding growth and investment opportunities.
- Ownership and Management Flexibility: There is flexibility in ownership arrangements and management models.
Setting Up a Company Limited by Shares: Requirements
To set up a company limited by shares, one must:
- Appoint at least one director.
- Have a registered office address in the relevant jurisdiction.
- Obtain a company seal.
- Prepare articles of association, outlining the company's internal regulations.
- Have at least one shareholder.
In summary, a company limited by shares offers shareholder protection, investment attraction, and capital raising opportunities. To establish such a company, there are specific requirements to meet. It's a good option for business starters seeking protection and flexibility.