Choose your shareholders for companies limited by 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.

Shareholders can:

  • control the company and make important decisions
  • be paid a share of the company’s profits through dividends
  • use their votes to agree on changes to the company

You’ll need to provide information on your shares and shareholders when registering your company.

Companies limited by guarantee have guarantors and a ‘guaranteed amount’ instead of shareholders and shares.

Work out your shares

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.

You can issue different types (or ‘classes’) of shares. Shareholders get different rights depending on the class of the share.

Most companies limited by shares are set up with one class of share, which is normally ‘ordinary’.

Shareholders with ordinary shares will usually get one vote on company decisions per share, and be paid dividends.

A shareholder who owns more than 25% of shares or voting rights in a company is classed as a person with significant control (PSC).

Part of Set up a limited company: step by step

  1. Step 1 Check if setting up a limited company is right for you

    1. Check what a private limited company is

    How you set up your business depends on what sort of work you do. It can also affect the way you pay tax and get funding.

    Most businesses register as a limited company or a sole trader.

    1. Find out about the different ways to set up a business
    1. Find local advice and free support for your business on business.gov.uk

  2. Step 2 Choose your limited company type

    1. Check whether you'll be limited by shares or guarantee

  3. Step 3 Choose directors and a company secretary

    You must appoint a director but you do not have to appoint a company secretary.

    1. Find out what directors are responsible for
    2. Check who can be a director or company secretary

  4. Step 4 Decide who the shareholders are

    You need at least one shareholder, who can be a director.

    1. You are currently viewing: Check how to choose shareholders for a company limited by shares
    2. Find out how dividends from shares are taxed

  5. or Decide who your guarantors are

    You need at least one guarantor who can be a director.

    1. Check how to choose guarantors for a company limited by guarantee

  6. and Identify people with significant control (PSC) over your company

    You need to identify people with significant control (PSC) - for example, anyone with more than 25% of the shares or voting rights.

    1. Find out what counts as a PSC

    You'll confirm these when you register your company with Companies House.

  7. Step 5 Choose a name

    1. Check the rules for company names
    2. Check if the name you want is available
    3. Check existing trade marks

  8. Step 6 Prepare documents agreeing how to run your company

    You need to prepare documents agreeing how to run your company. These documents include the :

    • 'memorandum of association'
    • 'articles of association'
    • 'statement of capital'
    • 'statement of guarantee'
    1. Find out how to create these documents

  9. Step 7 Check what records you'll need to keep

    1. Check the company and accounting records you must keep

  10. Step 8 Register your company with Companies House

    You'll need to register an official address and choose a SIC code - this identifies what your company does.

    1. Check the rules for registered office addresses and email addresses
    2. Check what your SIC code is
    3. Register your company with Companies House

  11. Step 9 Find out what to do after you've registered

    There are some things you may need to do once you've registered a limited company.

    1. Add Corporation Tax services to your business tax account
    2. Check the next steps for your limited company