This text is according to the Danish definition of the word.
When you are considering starting your own business, there are several different business forms to choose from. One of the most popular choices among entrepreneurs is the creation of a limited company, also known as A/S. A limited liability company is a legal structure that allows you to do business with certain benefits and liability limitations. Here is a basic guide to what a limited company entails:
What exactly is a limited company?
A public limited company (plc) is a company where the capital for operation is raised by issuing shares. The company can be founded by one or more owners or shareholders, as it is called, these shareholders can be both individuals and companies. The shareholders buy shares in the company and thereby gain ownership shares and influence in the company. The capital collected through the sale of shares is used to finance the company’s activities, development and growth.
The company is divided into shares, which are often distributed according to the shareholders’ financial contributions to the company.
This business form is ideal for you who want to list your company on the stock exchange.
Limitation of liability and ownership structure
The shareholders of the public limited company have limited liability, thus securing the shareholders’ private wealth. Therefore, there is not the great risk as for example starting a sole proprietorship.
However, there are a few requirements when setting up a public limited company. Among other things, there is a capital requirement of DKK 400,000, the annual accounts must be reported, the owner’s register must be kept and the company must consist of an executive board and a board of directors.
Creation of a limited liability company
Setting up a limited company involves a number of steps and formalities. You must draw up articles of association that determine the company’s rules and framework, including the ownership structure, management bodies and decision-making processes. A certain minimum capital, as mentioned above, must also be invested in the company when shares are issued.
Management and structure
A limited company typically has a board of directors and an executive board. The board is responsible for the overall strategy and decisions, while the executive board is responsible for day-to-day operations. This creates a clear division of responsibility and decision-making competences.
Publicity and transparency
Limited companies are subject to certain rules for transparency and publication of accounts and financial information. This creates confidence among investors and stakeholders and helps to protect the interests of shareholders.
