Company Structures

Question 1

Outline 4 main UK company structures

Answer 1

Private unlimited companies

• members unlimited liability
• may or may not have share cap / cannot offer to public or quotes on SE
• less rigid disclosure requirements

Question 2

Outline 4 main UK company structures

Answer 2

Private companies limited by guarantee

• Co had no share cap/ cannot be listed
• members are guarantors who agree to guarantee specific amount of own assets in event of liquidation
• Ltd

Question 3

Outline 4 main UK company structures

Answer 3

Private companies limited by shares

• members limited liability/ only liable for amount of unpaid shares upon liquidation
• Co cannot offer to general public or listed
• shares transferred with directors permission using STF & share certs
• Co must end in Ltd

Question 4

Outline 4 main UK company structures

Answer 4

Public limited company

• members limited liability
• share cap & offered shares to general public
• can be quoted on SE (no obligation)
• to become plc must fulfil stringent requirements;
• 2 directors (1 must be suitably qualified)
• obtain trading cert
• min share cap requirement of £50,000

Only become listed on REI if fulfil listing requirements approved by FCA

Question 5

What are hybrid companies

Answer 5

Type of Co crossed between companies limited by shares and limited by guarantee

Evolved in UK company law and found mainly offshore jurisdictions

Question 6

Outline parties of hybrid companies

Answer 6

Shareholders;

• own legal shares and control Co as possess voting rights
• don’t receive dividends or return of cap when Co wound up
• perform similar duties as trustees of trusts; control co without owning equitable rights to shares although shares registered in their name

Guarantors

• receive all benefits relating to capital and income distributions (like beneficiaries)
• in return they provide fixed nominal amounts towards co debts in event of winding up
• have contingent (potential) liability
• elected by directors and membership fees inject money into company (equal amount of investment required
• distribution rights belong to guarantors and can be transferred to 3rd parties

Directors

• rights and responsibilities stated in articles/ state scope of power
• discretion to make income distributions to guarantors

Question 7

Outline uses of hybrid companies

Answer 7

• alternate to trusts in civil law jurisdictions
• located offshore
• tax planning tools because don’t have to be included on estates declaration to HMRC (no assets)
• deferral of CGT
• lessen personal taxation
• guarantee members interests after death using various provisions
• benefits can be transferred to other members if one dies, avoid inheritance tax
• bespoke and tailored companies suit requirements of investors (subject to jurisdictions restrictions)
• guarantee meet co liabilities up to specific fixed amount

Question 8

Outline how a co status can be altered/ re registration

Answer 8

As Co evolves directors may decide to change Co status

• private limited to private unlimited (vise versa)
• private limited to public limited
• public limited to private limited by shares
• public limited to private unlimited

Co must fulfil stringent requirement to re register under laws/ CA06