In business, you never really know exactly when success will knock at your door. But if you take the right steps, have the right attitude and incorporate with the right type of legal structure, you can get to that point of success that you were looking for.
With this article, I will like to compare the characteristics of a liability company in the UK and others from the USA. Giving examples of ways to proceed in a place and another; with different kinds of companies.
Forming a Limited Company in the UK
Types of Limited Liability Companies in the UK
In the UK there are four types of limited companies. These are:
- Private Limited Company (limited by shares)
- Private Limited Company (limited by guarantee)
- Private Unlimited Company
- Public Limited Company
Related: Cashier’s Check vs. Money Order: Here’s the Difference
The officers of a limited liability company are integral to its overall management and success. Directors, shareholders and a secretary are the main officers in a limited company and will be required for Limited Liability Company incorporation.
Basically, the board of directors in a UK limited liability companies, are responsible for the company’s overall strategic planning to ensure long-term sustainability, to establish policies aimed at maximizing shareholder wealth, and the safeguard of the assets in the limited company.
UK law does not make it mandatory for a “Ltd.” company to appoint a secretary. We recommend a secretary since certain administrative duties can be delegated to him/her by the directors so that more focus can be placed on managing your limited liability company.
The responsibilities of secretaries in a Limited Liability Company according to the Companies Act 2006 are the same as those stated for directors under the same Act. They include:
- Giving notice to Companies House of new director appointments, amendments to personal details of directors and termination of a director appointment subsequent to Limited Liability Company registration
- Preparing and submitting the annual return of the Ltd. company
- Filing annual accounts of the Limited Liability Company.
- Distributing shares of the Ltd. company
- Registering charges of the limited company for the formation and during the course of business
- Giving notice of intention to alter the accounting year
- Notifying Companies House of the appointment of a corporate secretary and any subsequent changes to their details in the Limited Liability Company.
You are unable to be a director in a UK Limited Liability Company if you are:
- Under 16 years of age
- Disqualified by a court from serving as a director
- An undischarged bankrupt
Limited Company Meetings
Unlike Public Companies and Private Companies with traded shares, a Private Limited Company is not required to have an annual general meeting.
Ordinary meetings can be called throughout the financial year by the directors of the Ltd. company. The minimum period for issuing a notice is 14 days.
Related: Resources for forming a Limited Company within the UK
Limited Liability Company Records
The private limited company is by law required to record the minutes of every meeting. Since this task is usually undertaken by a secretary, appointing one would relieve the directors.
Official records that a UK Limited Liability Company is required to maintain are:
Minutes of Meetings
- A register with the details and number of shares held by every shareholder in the Limited Liability Company
- A register with the details of directors and secretaries in the Limited Liability Company
- A register showing loans and other liabilities that the Ltd company has
- A register showing directors’ interests upon Limited Liability Company registration, with later updates
- A document in which the residential address of every director in the Ltd company is recorded
Forming an LLC in the USA
A LLC in USA is a state recognized entity that blends the characteristics of a GP and a corporation. The primary characteristics of a LLC are flexibility in governance, tax liability similar to that of a GP, and limited liability for the members similar to that of corporations. A LLC is a state recognized entity that blends the characteristics of a GP and a corporation. The primary characteristics of a LLC are flexibility in governance, tax liability similar to that of a GP, and limited liability for the members similar to that of corporations.
The unique aspect of the operating agreement is, like the partnership agreement, it allows a great deal of flexibility in organizing the governance of the LLC. The operating agreement lays out all of the material provisions for governing the business. Common provisions include:
- Outlining each owner’s interest in the LLC,
- Rules for the transfer of LLC interest,
- The rights of each member,
- The authority of members,
- How the LLC will be managed,
- Allocation of business profits and losses,
- Voting rights and procedures,
- Requirements for meetings and records, and
- Rules for the entrance and exit of members.
State law does not require that an LLC have an operating agreement, but it is a very good idea to have one. States have default rules that control the governance of the LLC and the relationships between the LLC members. These rules are comprehensive, but they often do not adequately represent the intentions of the parties.
There is generally only one class of equity ownership in the LLC. There are, however, innovative ways of using contracts to provide additional rights and duties between the owners. A common form of special allocation of contractual rights is “profits-only interest”, which provides a right to share in profits but does not entail traditional ownership rights.
What limited personal liability protection does the LLC offer?
An important characteristic of LLCs is that the members do not face personal liability for the debts of the business entity. Members and employees are, however, agents of the LLC itself. Their actions subject the LLC to potential liability in contract and tort. The benefit of limited personal liability protection is that individual owners are shielded from personal liability created by other members or employees. Remember, an individual is always liable for her own conduct. The limited liability protections of the business entity do not protect against personal liability of one’s own actions.