Companies are either limited by shares or by guarantee.
This is probably the most popular organisational setup for commercial organisations, but a company can also be set up for a social purpose if it relates to social and / or environmental objectives, such as regenerating an area or providing employment and / or training for socially disadvantaged people.
A company provides limited liability for directors or shareholders in different ways depending on how it is constituted:
- A company limited by shares (CLS) has shareholders who each hold shares in the company. Their liability is limited to the amount of shares they hold – more shares, more liability. A public limited company (PLC) differs from a CLS in that a PLC's shares can be sold to the general public.
- In a company limited by guarantee (CLG), each of the members gives a guarantee for a certain sum that will be put towards the company's finances if the company is wound up. A CLG cannot raise finance by issuing shares, nor pay dividends to its members.
Any company requires registration at Companies House and you must submit annual accounts.