What is a share?

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Everyone has told me I should form a company limited by shares. I know nothing about company formation, and so I will go ahead and take their word for it. But I am a bit perplexed by the idea of issuing a share. I don’t even know what a share is, to be frank! Can anyone please enlighten me what shares are all about? Thank you for your help! And apologies for my ignorance.

Answers

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A share is just a unit of ownership. Limited companies should have at least one share when they are registered at Companies House. These shares are purchased by the company owners, who are called shareholders. Therefore, when you set up your company, you can choose how many shares to issue (create) and whether you will own all of them yourself or sell some to other people, i.e. business partners or family members.

The number of shares you own represents the percentage of profits you are entitled to, how much of the company you control, and the extent of your personal liability for company debts. It is therefore wise to think carefully before issues a large number of shares because your liability will increase accordingly.

a year ago
 

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