Definition of ‘Limited Company’
A limited company is a term used in the UK to mean a separate legal entity which a person can set up to run a business. The owners of the company have a limited liability to the amount of the nominal value of the shares which they hold in the company.
For example, if a limited company issues 1,000 shares of 1.00 nominal value each to four shareholders equally, then each shareholder has 250 shares with a nominal value of 250. If the limited company fails then each shareholder has a liability of 250.
As the limited company is a separate legal entity, any profit made by the company is taxed separately from the owners by way of corporation tax. The owners can receive a share of the profits by way of a dividend.
A limited company can be either a private limited company or a public limited company. A public limited company can offer its shares for sale on a recognized public stock exchange.
For further information see the Wikipedia limited company definition.
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