Share capital of a limited company
The share capital is what the shareholders pay the company for their shares. In the UK there is no minimum for a private limited company – but the way you structure your shares decides ownership, voting rights and how easily you can bring in co-founders and investors later.
How much share capital does a limited company need?
There is no legal minimum. Many founders incorporate with one ordinary share of £1, or with 100 shares of £1 each to make later splits between co-founders easier. At incorporation you file a statement of capital with Companies House showing the number, class and nominal value of the shares and how much has been paid.
Paying in and using it – a common misconception
There is no blocked account and no proof of payment before incorporation. Shares can even be issued unpaid; the shareholder then owes the company the unpaid amount. Once paid, the money belongs to the company and may be used for any business purpose.
What you cannot do is simply take the money back out: under the capital maintenance rules, dividends may only be paid from distributable profits, and money withdrawn otherwise is recorded on the director’s loan account.
Set out shares and control clearly
Shares carry votes, dividends and a share of the proceeds on a sale. With several founders, agree on the split, vesting and what happens when someone leaves – ideally in a shareholders’ agreement. New shares can be allotted later, for example for an investor; you report them to Companies House within one month.
Frequently asked questions
What is the minimum share capital of a limited company in the UK?
There is none. One share with a nominal value of £1 – or even less – is enough to incorporate a private limited company.
Is the share capital of my company locked away?
No. Once paid, it is part of the company’s money and can be spent on business purposes. It cannot be paid back to shareholders freely, though – only via lawful distributions such as dividends from distributable profits.
Does a company with £1 share capital come across as unprofessional?
Not in the UK – it is completely normal. Banks, landlords and suppliers judge your creditworthiness by turnover, accounts and funding, not by share capital. They may ask directors of young companies for a personal guarantee.
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