New Limited Companies
New Limited Companies
There are many formalities that are required to establish new limited companies. The main difference between incorporated companies and unincorporated companies is that the ownership and control are separate.
The ownership of new limited companies rest in the hands of the shareholders who appoint directors to manage the company. The directors are then required to report, on an annual basis, to the shareholders on the performance of the company. This will usually take place at the annual general meeting.
Advantages of New Limited Companies
There are many advantages for new limited companies, these are listed as follows:
- New limited companies have easier access to funding (as there will be several shareholders), this will make rapid growth possible.
- The company is therefore jointly owned by shareholders, and others can become members by purchasing shares.
- New limited companies take on a limited liability status, this means that all shareholders will have limited liability. If the company is wound up, the shareholders will only lose the amount that they have paid for the shares.
- New limited companies have a separate legal existence. This means that it can sue and be sued.
- The company is less affected by events and personal circumstances of any individual shareholder, therefore the company is has long continuity.
Shareholders within New Limited Companies
The main source of finance for new limited companies will come from the selling of shares. In this way, new limited companies are able to expand and grow rapidly. However there are certain restrictions placed on private new limited companies on the selling of shares: they must not be sold on the stock exchange; they can only be sold subject to approval of the other shareholders and new shares must be offered to existing shareholders first.
A share is a vote within a limited company, this means that each one gives an equal share in the profits and a say in the control of the company. As a result of this, shareholders of new limited companies are very powerful and tend to have much control over the company, often able to vote for the directors who will take management decisions on their behalf.
As a result the shareholders with the largest number of shares within new limited companies would have the greatest control of the company's direction in the future.
Setting up New Limited Companies Online
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