Set up a private limited company
5. Shares and shareholders
Most limited companies are ‘limited by shares’. This means they’re owned by shareholders, who have certain rights. For example, directors may need shareholders to vote and agree changes to the company.
Work out your shares
A company limited by shares must have at least one shareholder, who can be a director. If you’re the only shareholder, you’ll own 100% of the company. There’s no maximum number of shareholders.
The price of an individual share can be any value. Shareholders will need to pay for their shares in full if the company has to shut down. You can choose a low share value (for example, £1) to limit the shareholders’ liability to a reasonable amount.
Issuing your initial shares
When you register a company you need to provide information about the shares (known as a ‘statement of capital’). This includes:
- the number of shares of each type the company has and their total value - known as the company’s ‘share capital’
- the names and addresses of all shareholders - known as ‘subscribers’ or ‘members’
A company that issues 500 shares at £1 each has a share capital of £500.
You also need to include information about what rights each type of share (known as ‘class’) gives the shareholder. This information is known as ‘prescribed particulars’ and must include:
- what share of dividends they get
- whether they can exchange (‘redeem’) their shares for money
- whether they can vote on certain company matters
- how many votes they get