Types of Company
There are four main types of limited company:
Private Company Limited by Shares
Members' liability is limited to the amount unpaid on shares they hold. This includes those Community Interest Companies (CICs) which are private
companies limited by shares.
Private Company Limited by Guarantee
Members' liability is limited to the amount they have agreed to contribute to the company's assets if it is wound up. This includes all RTM (Right to Manage)
companies-, commonhold associations and those community interest companies which are companies limited by guarantee.
Private Unlimited Company
There is no limit to the members' liability.
Public Limited Company (PLC)
The company's shares may be offered for sale to the general public and members' liability is limited to the amount unpaid on shares held by them.
This also includes community interest public limited companies. (that is, CICs which are PLCs).
Can a private company convert to a PLC?
Yes. Both a private company limited by shares and an unlimited company with a share capital may re-register as a PLC, but a company without
a share capital cannot do so.
A private company must pass a special resolution that it be re-registered and deliver a copy of the resolution together with an application form to
the Registrar. The resolution must also:
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The application must be on Form 43(3), be signed by a director or secretary of the company, and be accompanied by the following documents:
Alter the company's memorandum so that it states that the company is to be a public limited company;
-Make any other alterations to the memorandum so that it conforms to that required for a public limited company;
-Make any required alterations to the articles of association of the company.;
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An unlimited company, in addition to the above, must:
A copy of the memorandum and articles of association of the company altered in accordance with the resolution above;
-A copy of a balance sheet prepared not more than seven months before the application date and containing an unqualified report by the company's auditors;
-A special report by the auditors regarding the net assets of the company at the balance sheet date in relation to the company's called-up share capital and its undistributable reserves;
-A valuation report on any shares issued as fully or partly paid up except in cash after the balance sheet date;
-A statutory declaration on Form 43(3)(e) confirming that the resolution has been passed, and that there has been no change in the company's financial position causing its net assets to be reduced to less than its called-up share capital and undistributable reserves.
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Can a PLC convert to a private company?
Yes. A public company limited by shares or by guarantee may re-register as a private company limited by shares or by guarantee by passing a special resolution to do
so. However, if enough members object, under section 54 of the Companies Act 1985 they may apply to the court to cancel the resolution within 28 days of its being
passed.
A Court may also order a public company to re-register as private on approving a 'minute of reduction' of share capital which results in the issued share capital falling
below the statutory minimum. In such a case the Court will also specify alterations to the company's memorandum and articles. A special resolution to re-register is not
required.
Similarly, a public company may be required to re-register as a private company if its issued share capital falls below the statutory minimum by other means. These
include redemption, forfeiture or repurchase of shares. In these cases a special resolution to re-register is required.
In all cases (except where a court has specified in an Order the alterations to be made) a resolution must also be passed to alter the memorandum and articles of
association to those required for a private company.
The application for re-registration (on Form 53) must be accompanied by copies of the resolutions and copies of the memorandum and articles as modified to
meet the company's new circumstances.
For further advice in this regard please do not hesitate to contact our Company Commercial Team in our sister company Penn Legal.
Include a statement in the resolution that the liability of the members is limited and what the company's share capital is to be;
-Make such alterations to the memorandum and articles of association as are necessary for them to conform to those of a company
limited by shares;
-The company must also satisfy the statutory minimum share capital requirements referred to in question 1 of chapter 2 before the special resolution is passed.