The answer to “who owns a limited company?” depends on the type of company that you’re looking at.
The company limited by shares structure – the most popular company type in the UK – requires a director and shareholder (and person with significant control). But which of these appointments equates to ownership of a company?
The answer is… The shareholder owns a limited by shares company. Let’s explore this a little further, taking limited by guarantee companies into account too.
Shareholders, guarantors, and members – what’s the difference?
Members is the catch-all term for people who own a company.
The members in a company limited by shares are known as shareholders. If there is more than one shareholder in the company, the exact ownership structure depends on how the shares are allocated (e.g. who holds the most shares).
The members in a private company limited by guarantee – typically used for non-profit work – are known as guarantors. Because there are no shares in a limited by guarantee company and typically no profits, exact ownership is generally not relevant.
Limited company liability
If the company encounters financial difficulties, it falls on the members. Fortunately, in both limited by share and limited by guarantee companies, the members’ liability is limited.
In the case of a limited by shares company, if the company were to accrue debts, shareholders are only liable for the value of shares that they hold. Whereas, in a limited by guarantee company, guarantors are only liable for the amount that they have guaranteed.
So there you have it, members own a company, and these can be referred to as shareholders or guarantors – depending on the type of company we’re looking at.
We hope you have found this blog post helpful. Please leave a comment if you have any questions about this post or anything else related to limited companies, and we’ll be happy to help.