Types of companies that can be set up in the UK

Discover the essential types of companies you can set up in the UK, from private limited companies to partnerships, helping entrepreneurs choose the right business structure for successful market entry and growth. The United Kingdom, with its status as one of the world’s leading economic centers, possesses a wide range of attractive factors for domestic and foreign businesses. The UK is known for its friendly, transparent and stable business environment. The British government always encourages investment and creates favorable conditions for businesses to develop. Clear legal system, protection of intellectual property rights and contracts, helping businesses operate and develop with peace of mind. The UK is also an important gateway to access the European and global markets. With an extensive trade network, free trade agreements and a strategic geographical location, being based in the UK makes it easy for businesses to reach customers and partners around the world. With the above advantages, the UK is an attractive destination for businesses looking to expand their operations and grow in the global market. Setting up a company in the UK not only brings economic benefits but also helps businesses improve their position and prestige in the international arena. However, before establishing a company here, customers also need to learn about the types of companies that can be established in the UK, Viet An Law would like to provide customers with some information about the types of companies that can be established in the UK through the article below.

Types of companies that can be set up in the UK

Public Limited Liability Company (PLC)

A Public Limited Company (PLC) is a popular type of business in many countries, especially in the United Kingdom and Commonwealth countries.

Characteristics of a public limited liability company (PLC)

• Public Offering: This is the most prominent feature of a PLC. The company can issue its shares to the public through the stock market to raise capital. This makes it possible for the company to access large capital from various investors.
• Limited Liability: Like other limited liability companies, the liability of shareholders in a PLC is limited to the value of the shares they own. This means that if the company is in financial difficulty, the shareholders will not be held personally liable for the company’s debts that exceed the value of their shares.
• Capital requirements and number of members: PLCs must have a minimum charter capital required by law (e.g. £50,000 in the UK) and a minimum number of members (usually two or more members).
• Disclosure of information: PLCs are obliged to disclose their financial and operational information in a transparent and complete manner to the public and shareholders. This helps to enhance the transparency and accountability of the company.
• Corporate governance: PLCs typically have a more complex governance structure than other types of businesses, including the board of directors, board of directors, and other departments.

Advantages of a public limited liability company (PLC)

• Easy capital raising: The ability to issue shares to the public makes it easier for PLCs to raise capital than other types of businesses.
• Access to capital markets: PLCs can access capital markets to raise capital through the issuance of stocks or bonds.
• Improve reputation and image: Becoming a public company can help improve the reputation and image of the business, attracting many partners and customers.
• Stock liquidity: PLC stocks are usually highly liquid, easy to buy and sell on the stock market.

Disadvantages of a public limited liability company (PLC)

• High cost of establishment and maintenance: Establishing and maintaining a PLC is often more expensive than other types of businesses due to capital requirements, information disclosure, and governance.
• Pressure from shareholders: PLC is under pressure from shareholders in terms of business results and stock value.
• Loss of Control: The public offering of shares can result in the loss of control of the company by the original founders.

Private Guarantee Limited Liability Company

A Private Guarantee Limited Liability Company is a special type of business, often used by non-profit organizations.

Main features

• No share capital: Unlike a regular limited liability company or a joint stock company, a private limited liability company has no share capital and therefore no shareholders.
• Members are guarantors: Members of the company do not contribute share capital but act as guarantors. They commit to contribute a certain amount of money (usually a small, nominal amount) to the company’s assets in the event that the company is dissolved and becomes insolvent to pay its debts.
• Limited Liability: The liability of the members is limited to the amount of money they have committed to guarantee.
• Purpose of Operation: A private security limited liability company is usually formed for a non-profit purpose, such as charitable, cultural, educational, or sporting activities.

Advantage

• Suitable for nonprofits: This type of company is especially suitable for nonprofits, helping them limit the responsibilities of their members and build credibility.
• Easy to set up: The procedure for setting up a private secured limited liability company is usually simpler than other types of companies.

Shortcoming

• Difficulties in raising capital: Due to the lack of share capital, private limited liability companies have more difficulty in raising capital than other types of companies.
• Less flexibility: The organizational structure and operations of a private secured limited liability company are generally less flexible than other types of companies.

Private Company Limited By Shares

A Private Company Limited By Shares is one of the most popular types of businesses in the United Kingdom.

Main features

• Share capital: A private equity limited liability company has a share capital divided into shares. Shareholders own shares and have the right to participate in the management and administration of the company.
• Limited Liability: The liability of the shareholders is limited to the value of the shares they own. This means that if the company is in financial difficulty, the shareholders will not be held personally liable for the company’s debts that exceed the value of their shares.
• Number of Members: The minimum number of members is 1 and there is no maximum limit.
• Legal Status: A private equity limited liability company has legal status, has its own seal, and has the right to participate in business activities in accordance with the laws of the United Kingdom.

Advantage

• Easy capital raising: A equity limited liability company can raise capital from shareholders through the issuance of shares.
• Limited Liability: Shareholders are only liable within the value of their shares, which helps to minimize risk for shareholders.
• Flexibility: The organizational and operational structure of a private equity limited liability company is flexible, which can be adjusted to suit the size and business goals of the company.

Shortcoming

• Disclosure requirements: A private equity limited liability company needs to comply with certain disclosure requirements under UK law.

Private Unlimited Liability Company

A Private Unlimited Liability Company is a less common type of business than other types in the United Kingdom.

Main features

• Infinite liability: This is the biggest distinguishing feature of a private unlimited liability company. The members of the company are liable for unlimited liability for the debts of the company. This means that if the company is in financial difficulty, members may have to use their personal assets to pay off the company’s debts.
• No share capital: A private limited liability company has no share capital and therefore no shareholders.
• Number of Members: The minimum number of members is 1 and there is no maximum limit.
• Legal Status: A private limited liability company has legal status, has its own seal, and has the right to engage in business activities in accordance with the laws of the United Kingdom.
• No mandatory filing of financial statements: One of the advantages of private unlimited liability companies is that they are not required to file annual financial statements with Companies House. This helps companies maintain secrecy about their financial situation.

Advantage

• Confidentiality of financial information: The absence of mandatory submission of financial statements helps companies keep their financial information confidential.
• Credibility: Although less common, this type of company can build a certain reputation, especially in areas that require high reliability.

Shortcoming

• High risk: Infinite liability is a major risk for the members of the company.
• Difficulties in raising capital: Due to the lack of share capital and unlimited liability, private unlimited liability companies often have difficulty raising capital.