Limited companies
The shares in a company are owned by its shareholders. If the company is a limited liability company, the shareholders’ liability, should the company fail, is limited to the amount, if any, remaining unpaid on the shares held by them. A company is a separate legal entity and, therefore, is separate and distinct from those who run it. Only the company can be sued for its obligations and can sue to enforce its rights.
There are several types of limited company:
- A Private Company Limited by Shares (LTD company): The members’ liability, if the company is wound up, is limited to the amount, if any, unpaid on the shares they hold. The maximum number of members is 149. An LTD company can have only one director if it chooses. An LTD company does not have stated objects and can undertake any activity. Part 2 of the Companies Act 2014 refers.
- A Designated Activity Company (DAC) – (limited by shares). The members’ liability, if the company is wound up, is limited to the amount, if any, unpaid on the shares they hold. The maximum number of members is 149. A DAC company must have at least 2 directors. Constitution includes a memorandum and articles of association. The memorandum will include stated objects. Part 16 of the Companies Act 2014 refers.
- A Designated Activity Company Limited by Guarantee (DAC) – (limited by guarantee). The members have liability under two headings; firstly, the amount, if any, that is unpaid on the shares they hold, and secondly, the amount they have undertaken to contribute to the assets of the company, in the event that it is wound up. The maximum number of members is 149. A DAC company must have at least 2 directors. Constitution includes a memorandum and articles of association. The memorandum will include stated objects. Part 16 of the Companies Act 2014 refers.
- A Company Limited by Guarantee (CLG) (limited by guarantee not having a share capital): The members’ liability is limited to the amount they have undertaken to contribute to the assets of the company, in the event it is wound up, not exceeding the amount specified in the memorandum. As a guarantee company does not have a share capital, the members are not required to buy any shares in the company. Many charitable and professional bodies find this form of company to be a suitable vehicle as they wish to secure the benefits of separate legal personality and of limited liability but do not require to raise funds from the members. Part 18 of the Companies Act 2014 refers.
- A Public Limited Company (PLC): The liability of members is limited to the amount, if any, unpaid on shares held by them. It should be noted that it is unlawful to issue any form of prospectus except in compliance with the Companies Act 2014. The nominal value of the company’s allotted share capital must not be less than €25,000, at least 25% of which must be fully paid up before the company commences business or exercises any borrowing powers. (s.1010) Part 17 of the Companies Act 2014 refers.
Unlimited companies
In an unlimited company, there is no limit placed on the liability of the members. Recourse may be had by creditors to the shareholders in respect of any liabilities owed by the company which the company has failed to discharge. An unlimited company can be either public or private.