1.5 Limited Company
Currently there are over 3.5 million limited companies (Public, private and third sector) registered in the UK with 500,000 new companies being incorporated annually. In Scotland company registrations are carried out in Edinburgh. Companies can be limited by guarantee or can be limited by shares. It depends of the needs of the organisation as to which kind of limited company is incorporated (see section 1.10 for information on how to incorporate a company).
Companies Limited by Guarantee are often incorporated by Voluntary Organisations and write the intention to be ‘not for profit’ into their Articles of Association. The Directors are the only members and would usually have their liability for the company limited to £1. A Company Limited by Guarantee can apply to OSCR for Charitable status if desired.
Companies Limited by Shares are different due to the organisation being able to raise funds through the sale of shares. In this case both the Directors and the Shareholders are members of the Company. This model is not eligible for Charitable Status with OSCR due to the private gain that can be made by shareholders through dividends. Often existing incorporated charities when looking to open a trading arm will use a Company Limited by Shares with the main charitable body as the sole shareholder in order to have complete control of the trading arm as Directors and Shareholders. This also allows for any profit to be reinvested back into the main shareholding charity.
The key characteristics of Companies Limited by Guarantee and by Shares can be found in the table below.
Key Characteristics of a Company registered with Company House
1.0 Getting Started
1.1 Legal Structures
1.2 Unincorporated Association
1.4 Scottish Charitable Incorporated Organisation
1.5 Limited Company
1.6 Community Interest Companies
1.7 Developing a Governing Document
1.8 Writing your Organisations Purposes
1.9 Applying for Charitable Status
1.10 Applying for Company Status
1.11 Applying for CIC Status
2.0 Developing and Growing
3.0 Taking on an Asset
4.0 What is Social Enterprise
7.0 Dissolving an Organisation