What is a company
When you incorporate a company, you are creating a separate legal entity to carry on business.
Every company has certain basic elements:
- A name which has been reserved by the Registrar of Companies
- At least one share, one shareholder and one director
- A registered office where the company records are kept
- An address for service where legal documents can be served
- The Registrar will also ask for an address for communication.
Liability is limited to the company
Although it is common to speak of a 'limited liability company' the company is liable in full for all obligations that it incurs. It is in fact the liability of the shareholders that is limited - they are only liable for any unpaid money owing on their shares (subject to any personal guarantees given).
Limited v Unlimited
All companies are "limited liability" companies unless the particular company's constitution provides otherwise. Unlimited companies are rare.
Companies, once registered, have the status of incorporated
A company comes into existence after it is incorporated under the Companies Act 1993. Once incorporated it is recognised in law as an independent legal entity (a body corporate). This means it is treated as being a separate 'person' from its directors and shareholders. It can therefore do many of the same things as a natural person – for example, hold property in its own name, enter contracts, sue and be sued, etc.
