Expanding into the UK: Choosing the right type of limited company

Limited companies

As a foreign business setting up operations in the UK, a limited company is a great way to ringfence potential financial and legal liabilities. This is because members in these companies have limited liability in the event of liquidation. In addition to this, any legal problems arising in a subsidiary business in the UK can be dealt with without it affecting the parent company.

Let’s take a look at the four types of limited companies in the UK.

Private company limited by shares

Private limited companies are more flexible than public limited companies. Most of the companies we help relocate to the UK take this form.
 
With a private limited company, shares are not available to the public and investors are protected if the company goes into liquidation. The shareholders will only be liable for the amount they have contributed for their shares.

Public limited company

These are similar to private limited companies in that members hold shares and are only liable up to the capital value of their shares in the event of liquidation. An important distinction between this and a private limited company is that the share capital of a public limited company must be at least £50,000. 

Although it is common for shares in a public limited company to be publicly traded, this is not a requirement. Some businesses opt out of public share trading but still register as a public limited company due to the economic cache that comes with registration.

Private unlimited company 

Parties who wish to set up this kind of a company usually opt to create a partnership instead, making these companies particularly rare. 

A reason one would choose a private unlimited company over a partnership is to avoid paying personal Income Tax in favour of paying Corporation Tax. In this type of company, there is no limit to the members’ liability in the event that the company is wound up.

Private company limited by guarantee

Due to its very specific application it is very rare we receive queries about private companies limited by guarantee. These companies do not have share capital and the members’ liability is limited to the amount that they have agreed to guarantee. 

This type of company is used principally for charitable organisations and clubs. The guarantee has the effect of ensuring that should the company go into liquidation the members are only liable for the amount they agreed upon. 

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We can help you decide which type of limited company to set up in the UK. Give us a call on +44 (0) 20 7759 7584 or visit our website for more information.