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.
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