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Am I liable for the company's debts?

In general, no. Shareholders are only liable for the amount of shares they subscribe to if these remain unpaid. A Limited Company is ‘limited’ in the sense that its owners are not liable for its debts.

Directors are in general not liable unless they sign a personal guarantee or trade fraudulently.

Some people see a Limited Company as an insurance policy, especially for a new or high-risk business.
Are there any disadvantages?

There are certain mandatory obligations attached to limited companies such as the submission of annual returns and annual accounts.

Certain aspects of your business will be in the public domain through Companies House' database which is accessible to everyone.

Other aspects you should consider are tax implications. If you trade with a limited company you are liable for corporation tax on the profits. Click here for further information on Corporation Tax: http://www.hmrc.gov.uk/businesses/tmacorporate-tax.shtml
Are there compliance costs?

The annual return to Companies House costs £15.00 if submitted electronically, alternatively £30 for a paper submission.
What different types of shares are there?

A company may have as many different types of shares as it wishes, all with different conditions attached to them. The most common are ORDINARY, with no special rights or restrictions. PREFERENCE, these normally carry a right that any annual dividends available will be paid preferentially on these shares before other classes. CUMULATIVE PREFERENCE, carry a right that if the dividend cannot be paid in one year, it will be carried forward to successive years. REDEEMABLE, issued with an agreement that the company will buy them back at the option of the company or the shareholder after a certain period, or on a fixed date. A company cannot have redeemable shares only. Shares can also be issued as A, B, C Shares etc.
Can a company issue ‘bearer shares’?

The only way to do this is for a previously registered share to be swapped for a warrant entitling the holder (bearer) of that warrant to the rights to a share. If the warrant is lost or stolen, the rightful owner may encounter serious difficulties to prove they are indeed the correct holder of that warrant. A warrant may or may not confer membership rights to its holder, depending on the company's articles. This is not commonly done for private companies, as there is normally no advantage.
Can I use any name?

There are restrictions. Please see the list of ‘sensitive words’.
Do I have to trade immediately?

No. Your company can remain dormant (non-trading) for as long as you wish.
What are pre-emption rights?

Pre-emption rights, are the rights of existing shareholders to be offered new shares by the company, prior to the shares being offered for sale elsewhere. These rights should be contained in your Memorandum & Articles of Association.
What are the Companies House annual costs?

The only statutory fee is £15 for the annual return if submitted on line, otherwise £30 if submitted by paper.
What if a shareholder refuses to pay?

If a shareholder refuses to pay money due on a share, the company may use forfeiture proceedings if permitted by its articles. A forfeited share may be sold, re-allotted or otherwise disposed of at the discretion of the directors. Companies House need not be notified of the forfeiture or re-allotment except in the list of members on the company's next annual return. A company cannot use forfeited shares for the purposes of voting.
What is a registered office?

This is an official address for the business, where official documents and letters can be delivered. It does not have to be the trading address. This must be in the country of incorporation (i.e. a Scottish company must have a Scottish address) and has to be shown clearly on all official company documentation.
What is authorised (share) capital?

This is the maximum amount of shares and their value in monetary terms that the company can have on a given date. It can be changed if the existing shareholders approve of the change.
What are Memorandum & Articles (M&A’s)?

This is the document that governs the running of the company. It is the company's constitution. It is usual to have several copies for distribution to banks, solicitors etc
When do I pay for my shares?

Normally the shares can be paid for at a date after they are issued. If they are not paid for when the request for funds is forthcoming, the company may take the shares away. If a company fails and money is owing for shares that have been allotted by the company the shareholder is liable to pay the outstanding money to the creditors.
Which currencies can a share be in?

Any currency may be used for a private company.
Who can shares be sold or given to?

The people who own the shares are the owners of the company. At the discretion of the directors and existing shareholders, anyone can become a shareholder. The shareholders can appoint or remove directors at a properly constituted meeting of the shareholders. It is essential that all directors and shareholders take professional advice prior to allowing third parties to become shareholders. Once a share has been allotted it cannot simply be taken back.
Who owns the company, and who runs it?

The shareholders own the company. The directors run it. Sometimes decisions need the approval of the shareholders. The directors may also be shareholders. The director(s) is/are responsible for the running of the business and the secretary must ensure that all the statutory procedures are carried out and complied with. This includes dealing with minutes and filing forms at Companies House.

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