September 19, 2019

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Business Entity Formation in the UK

Incorporation, more commonly known as company formation in the UK, is generally a quick and fuss-free process. Company formation can be done online and concludes with the receipt of a certificate of incorporation from Companies House, the UK national registry. Incorporation of many types of companies is governed by the Companies Act 2006.

Public Limited Company (PLC)

– a limited liability company that may or may not be publicly listed and is composed of shares that are publicly traded. A PLC must have a share capital of at least £50,000.

Private company limited by shares / private limited company (Ltd.)

– confers limited liability upon its shareholder(s). In contrast with a PLC, its shares cannot be traded in the public markets.

Limited Liability Partnership (LLP)

– governed by the Limited Liability Partnerships Act 2000, an LLP is a partnership which confers upon some or all of its partners limited liability. In the UK, all partners of an LLP have joint responsibility, meaning that every partner is collectively responsible for the actions of every other partner.

Limited Partnership (LP)

– an LP shares many similarities with an LLP, but a key difference is that general partners are accompanied by one or more limited partners. Limited partners are also granted limited liability but are not imbued with the authority to make binding decisions on the LP unless granted the authority to do so, or held out to have such authority.

Private company limited by guarantee

– is usually not composed of shares or held by shareholders, but is run by members who function as guarantors. Each guarantor must undertake to put up a modest sum to facilitate the winding up of the company.

Unlimited company

Community Interest Company (CIC)

– Introduced under the Companies (Audit, Investigations and Community Enterprise) Act 2004, a CIC is a limited company that has requested for CIC status and had such status approved by the Companies House registrar. CIC status may be granted those companies that are identified as social organizations and whose activities are designed to benefit the community.