Private limited companies are owned by individual people, trusts, associations and/or other companies. The owners of a company limited by shares are known as ‘shareholders’ because they each own at least one share in the company. The owners of a company limited by guarantee are known as ‘guarantors’ because they guarantee a sum of money to the company.
The collective term for limited company shareholders and guarantors is ‘members’, but the first members of a new limited company are also referred to as ‘subscribers’. These original members agree to form a company by subscribing (adding) their names to the memorandum of association.
How many people can own a limited company?
A private limited company can have one owner or lots of owners. This means that one person or corporate body (i.e. another company) can be the sole owner of a company. It can also be collectively owned by lots of different people and/or corporate bodies.
Are owners of a company also directors?
It is quite common for the people who own a company to also be directors of that company, but it is by no means a legal requirement. It is entirely possible for the owners to appoint other people as directors to run the business on their behalf.
What decisions do company owners make?
Company owners are responsible for making important business decisions in exceptional circumstances. This can involve appointing and removing directors, choosing which powers to grant directors, altering the share capital of the company and making changes to the articles of association. Directors are responsible for all other day-to-day business decisions.
What is the financial liability of company owners?
The owners of a limited company are responsible for contributing money to the business up to the limit of their liability. The liability of shareholders is limited to the nominal value of their purchased shares. This is usually £1 per share. The liability of guarantors is limited to their financial guarantees. These are usually set at £1 each. Shareholders and guarantors must contribute these agreed sums of money when they join the company or when the company requests the money to pay its bills.