What is a limited company?
A limited company is registered at Companies House. It must operate within the Companies Acts and is governed by its own memorandum and articles of association. There are different types of limited company but they all have these qualities.
Every company has a constitution in the form of memorandum and articles. A company must have both directors and members. (Members are shareholders unless the company is limited by guarantee).
Once registered a company has corporate personality. It is a legal entity (or legal person) with its own legal rights and obligations, separate and distinct from those of its members. The company's property is its own and is not treated as belonging to the company's shareholders and directors. The company itself can enter into contracts, employ people, sue and be sued and can be liable if it commits criminal offences.
The key feature of a limited company is that it offers limited liability to
its members. The company (as a separate legal entity) is liable for its debts
and the members and directors are not personally liable (unless they have acted
wrongly in some way). The members' liability is limited to paying for their
shares.
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