Who owns a private limited company?
The answer to “who owns a limited company?” depends on the type of company you’re considering.
A company limited by shares the most popular company type in the UK requires a director, a shareholder, and a person with significant control (PSC). But which of these roles equates to ownership of the company?
The answer is that the shareholder owns a company limited by shares. Let’s explore this further, also considering companies limited by guarantee.
Shareholders, guarantors, and members – what’s the difference?
“Members” is the catch-all term for people who own a company.
In a company limited by shares, the members are known as shareholders. If there is more than one shareholder, the exact ownership structure depends on how the shares are allocated (e.g., who holds the most shares).
In a private company limited by guarantee, typically used for non-profit work, the members are known as guarantors. Because there are no shares and usually no profits in a company limited by guarantee, exact ownership is generally not relevant.
Limited company liability
If the company faces financial challenges, the responsibility lies with the members. However, in both limited by shares and limited by guarantee companies, the members have limited liability.
In a limited by shares company, if debts arise, shareholders are only responsible for the value of the shares they own. In contrast, in a limited by guarantee company, guarantors are only liable for the amount they have pledged to guarantee.
So, members own the company, and we refer to them as either shareholders or guarantors, depending on the company structure.
Do you have any other questions?
As a summary, shareholders actively own a private limited company by shares. They hold equity and make decisions based on their share ownership. In contrast, guarantors manage companies limited by guarantee, often for non-profit reasons. Both ownership structures limit liability, protecting the owners from being personally responsible for company debts.
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