Limited Company FAQ (UK) - Ownership, Inheritance & Legal Status

The money (cash, assets, bank balances) belongs to the **company itself**, not the directors or shareholders personally. A limited company is a separate legal entity, so its funds are company property. Directors manage/spend it only for legitimate business purposes (e.g., expenses, salaries, dividends from profits). Shareholders own the company (via shares) and benefit indirectly through dividends or value growth, but they don't own the money directly — personal withdrawal must follow legal routes (salary, dividends, loans).

The **shareholders** (members) are the true owners of a private limited company limited by shares — they own it in proportion to their shareholding (e.g., 100 shares = 100% ownership). Directors run the company day-to-day but don't necessarily own it unless they hold shares. In small Ltds, the same person is often both director and shareholder (full owner/control). In companies limited by guarantee (no shares), "owners" are guarantors/members with no ownership stake in profits/assets.

No one "inherits" the company as a whole — shares are inherited. Upon a shareholder's death, their shares pass according to their **will** (to named beneficiaries) or under **intestacy rules** (no will: spouse/children/relatives in priority order). The company continues unchanged (separate entity). Executors/personal representatives handle transfer (via probate, stock transfer form, Companies House update). If sole shareholder/director dies, appoint new director first to manage/administer.

Ownership transfers via the deceased shareholder's shares to their beneficiaries (per will or intestacy). The company remains owned by whoever holds the shares post-transfer. If sole shareholder dies, shares go to heirs/executors; company doesn't dissolve automatically. Update share register and Companies House (e.g., new PSC notification if significant control changes).

Yes — indirectly by inheriting the shares. Shares form part of the deceased's estate and pass to beneficiaries via probate/will/intestacy. Once transferred (legal process: probate grant, stock transfer, board approval if required), new owner(s) control the company proportionally. Company continues operating unless wound up.

Transfer ownership by selling/transferring shares: Agree price/terms, complete stock transfer form (J30), get board approval (if articles require), pay any stamp duty (0.5% on consideration over £1,000), update company share register, file PSC notification/confirmation statement with Companies House if control changes. For full transfer (e.g., sole owner), may include selling assets or shares. Use solicitor for complex deals; tax implications (CGT for seller).

Yes — easily via share transfer (most common). Shares can be sold/gifted/transferred (subject to articles restrictions, e.g., pre-emption rights). Company itself isn't "transferred" — ownership changes hands through shares. Notify Companies House of changes in persons with significant control (PSC). Asset sales or company purchase possible but more complex/tax-heavy.

No — a company limited by guarantee (CLG, common for charities/non-profits) has no share capital, so cannot issue/pay dividends. Any surplus/profits must be reinvested in the company's objects (cannot distribute to members/guarantors). Contrast with Ltd limited by shares, which can pay dividends from distributable profits to shareholders.

Profits belong to the company. Directors decide distributions (e.g., dividends) from **distributable profits** (after tax/expenses/reserves). Dividends paid pro-rata to shareholdings (e.g., 60% owner gets 60% of dividend). No automatic split — requires board resolution, solvency check, proper records. Other extractions: salary (to directors/employees), bonuses, pension. Unequal if different share classes.

100% ownership requires owning all shares. But:

• 50%+ (majority) = control over ordinary resolutions (e.g., appoint/remove directors)
• 75%+ = control special resolutions (e.g., change articles, wind up)
• Even 1 share = partial ownership, rights to dividends/info

In small companies, majority shares = effective "ownership" for decisions. Full control often needs majority + director role.

Company continues (separate entity). If director was also shareholder, their shares pass via will/intestacy. Appoint replacement director(s) if needed (minimum one required). File TM01 (resignation on death) and update PSC if significant control changes. Executors may need to appoint interim director to manage. No automatic dissolution unless articles specify or company insolvent.

The company has **unlimited liability** for its own debts/obligations (can owe any amount). But shareholders/directors have **limited liability** — personal exposure capped at unpaid share capital (usually £1 or nominal). Company can be sued, fined, or wound up; personal assets protected unless misconduct (e.g., guarantees, wrongful trading).

Yes — as a separate legal person, the company can sue/be sued in its own name (e.g., breach of contract, debt recovery, employment claims). Proceedings against "Company Name Ltd". Directors rarely personally liable unless exceptions (fraud, personal guarantees).

Yes — a private limited company is a **separate legal person** (corporate personality). It can own assets, enter contracts, sue/be sued, employ people, and incur debts independently of its owners/directors (Salomon v Salomon principle). This enables limited liability.

A UK private limited company (Ltd) is a **separate legal entity** with perpetual succession (continues despite owner/director changes). It has limited liability for shareholders, must file public accounts/returns, and is regulated by Companies Act 2006/Companies House/HMRC.

Typically a **private company limited by shares** (most common): shares divide ownership, limited liability. Alternatives: limited by guarantee (no shares, for non-profits). Governed by memorandum/articles of association, with directors managing and shareholders owning.

Ownership via **shares** — shareholders own percentages based on issued shares held. Registered at Companies House (public for >25% stakes via PSC register). Directors manage but don't own unless shareholders. Can include different classes (e.g., voting/non-voting).

Limited liability means shareholders are not personally responsible for company debts beyond their invested share capital (usually nominal £1). If company fails, creditors claim company assets only — personal assets (house, savings) protected (unless personal guarantees, fraud, wrongful trading). Core benefit of Ltd structure.

Common key restrictions (vs public/PLC):

1. Cannot offer shares to the general public (private placement only; max flexibility but no stock exchange listing)
2. Usually restricts share transfer (e.g., pre-emption rights in articles to keep ownership closed)
3. Maximum 50 members/shareholders historically (though removed in 2009, still "private" implies closed)

Other practical: more filing/privacy than sole trader, but fewer public disclosure rules than PLC.