What are the different types of company?

They are the following:

Public company limited by shares

Private company limited by shares

Private company limited by guarantee

A company limited by guarantee and having a share capital

Private unlimited company with share capital

Private unlimited company without share capital

All public companies are limited by shares. All listed companies are public companies, although not all public companies are listed. All unlimited companies are private companies. Since 22nd December 1980 it has not been possible to register a new company limited by guarantee having a share capital.

What are the differences between public companies and private companies limited by shares?

Public companies must be limited by shares. They cannot be unlimited or limited by guarantee. Key differences include the following:

The allotted value of the share capital of a public company must be at least £50,000, of which at least 25 per cent must be paid up. Any share premium must be 100 per cent paid up. There is no minimum sum for the share capital of a private company, although it cannot be NIL. In both public and private companies there is no maximum amount for the share capital.

Only a public company can be a listed company.

Only a public company can issue a prospectus and offer its shares to the public.

More differences are detailed in the answer to the next question.

Are there any more differences between public companies and private companies limited by shares?

Yes there are. There are many others, but they include:

The name of a public company must end with the words 'Public Limited Company[1], the abbreviation 'PLC' or the Welsh language equivalents.

Public companies have a shorter period than private companies to deliver their accounts to the members and the Registrar.

Public companies must hold annual general meetings. It is optional in private companies.

Public companies must have at least two directors. If permitted by their articles (which Table A does not), a private company may have a sole director.

Written resolutions of the members are only available to private companies.

There are different model articles.

Can a company start trading (or operating) as soon as it has been registered?

A private company can start trading (or operating) immediately. A public company may only do so when a certificate entitling it to commence trading has been issued by the Registrar. It should also be noted that it may not borrow until this certificate has been issued. Application for the certificate may be made on form SH50. It is a declaration that the value of the allotted share capital is at least £50,000, and it gives details of how the shares are paid up, preliminary expenses and any payments or benefits in favour of the promoter.

What exactly is meant when it is said that a company has a separate legal personality?

An incorporated company has a legal existence separate from the legal existence of its members. It can owe property in its own name and it can be sue and be sued in its own name. It can in some circumstances sue and be sued by its members. The principle that a company has a legal existence separate from that of its members was confirmed by the case Salomon v Salomon and Co Ltd 1897, one of the most celebrated cases in company law and possibly well known to you.

Exactly what does limited liability mean?

In the context of this question limited liability means the liability of the members, not of the directors or others. The overwhelming majority of companies are limited liability companies, which means that the liability of the members is limited by shares or by guarantee. If a company is limited by shares, the liability of each member is limited by the full amount of the shares that he holds. Most shares are issued fully paid, so in the event of an insolvent liquidation the shares become worthless. If shares are partly paid, the members are liable to pay the uncalled part of their shares. If a company is limited by guarantee and it becomes insolvent, each member must contribute the amount of his guarantee.

Would you please give me some figures to show the expansion in the number of registered companies?

The concept of a private limited company dates back to 1907 and at that time there were less than 90,000 companies on the register. In recent years there has been an enormous increase in the number of companies on the active register. The figures (rounded to the nearest hundred) have been:

On 1st June 2008 the total number of companies registered in Britain was 2,460,770 of which 10,715 were public companies. The total number of companies registered in the United Kingdom is now close to 2,700,000 of which approximately 40,000 are registered in Northern Ireland.

Around 99.6 per cent of companies are private companies and only 0.4 per cent are public companies. Although Scotland has around ten per cent of the population it only has around five per cent of the companies.

What are the alternatives to a company?

They include the following:

Trading as a sole trader

A general partnership

A limited partnership

A limited liability partnership (LLP)

An unincorporated association

A trust