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Structure of a Limited Company - Shareholders The following offers a brief guide to the structuring of a UK Limited Company. This does not set out to explain the complexities of company law, nor do we intend to set out a full list of the responsibilities of the company director. We do, however, aim to give the uninitiated some basic information to assist in the important decisions concerning the appointment of company officers and other matters when setting up a company for the first time. Shareholders A company can have any number of shareholders (also known as members) holding any number of shares. There must be at least one shareholder, as a company cannot exist without a share capital. Sole shareholders are allowed in private companies. As with directors and the company secretary, this becomes a matter of public record and there are specific rules regarding the transfer of shares between shareholders. There is no stamp duty payable on allotments of new shares, but stamp duty is payable in most circumstances when transferring shares from one shareholder to another. Shareholders can be resident anywhere in the world and can be of any nationality. In general, the rules regarding shares are quite complex, although with the vast majority of companies, there is little to consider other than the initial allotment of shares, which may not change from year to year. One of the most frequently asked questions is "what is the usual share structure for a new company". There is no strict formula to follow. In simple terms, the shareholding of a company determines its ownership, and this is usually structured very easily. If your company is to be wholly owned by yourself, you need only have a single share issued in your name to begin with. Alternatively, should you wish to spread shares amongst various family members or investors, an allotment of 100 shares may give the flexibility required. Larger numbers of shares can be issued to shareholders who introduce capital into the company, reflecting their financial investment. High levels of capital are sometimes, although rarely, introduced at the outset in order to demonstrate high levels of capital commitment to encourage confidence in the company on the part of potential lenders or suppliers. However, please note that in the event of failure of a business, a shareholder may be responsible for any amount outstanding on shares registered in his name that are not fully paid at the date of receivership. Therefore it is not advisable to allot large numbers of unpaid shares at the outset. The number of shares that can be issued in a company is limited by the authorised capital, although this can be raised at any time and to any level, subject to agreement of the members. It is sometimes necessary to maintain confidentiality of the identity of shareholders, and to enable this, Company Registrations Online can provide nominee shareholders to whom shares can be registered. In these circumstances, a confidential declaration of trust is signed by our nominees, ensuring the beneficial owner maintains control of the shares. Click here to find more information about our Nominee Shareholder Service. Click here to find out more about Shareholder Agreements. |
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