The Basics of Setting Up a Company

All companies might appear to be the same but there are several different types. Choosing the most appropriate setup is essential from the outset.

♦ Private unlimited company—The shareholders/members liability is limited to the value of all debts and claims against the company. The most notable example is "Lloyds of London" insurance syndicate.

♦ Private limited company—Liability is limited to the face value of the shares, whether issued or not.

♦ Private company limited by guarantee—The extent of the directors' liability is limited to the value or not of the irrevocable undertaking to cover a specified amount. This only has to be paid up if the company goes into liquidation.

♦ Public limited company (Listed)—The shares can be offered to the public through the major stock exchanges. Shareholders' liability, like a private company, is limited to the amount of unpaid shares held.

Unless you are able to go public immediately, you will probably want to form a private company.

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