This is the legal description of the majority of UK limited companies....

"Private" means that the Shares cannot be traded on the stock market. Nobody can buy shares in a private limited company without permission from the Director(s) of that company.

"Company" means that the business is legally registered at Companies House and has at least two Officers listed in the Companies House registry (minimum 1 Director and 1 Company Secretary).

"Limited" means that the liability of the owners ("shareholders") is limited. If the business fails, the shareholders' personal assets are protected and may not be claimed by creditors.

"By Shares" means that the limited of individual liability is defined by the number and value of the Shares each person owns in the business.

"Shares" are tokens of ownership. Each Share has a nominal value, which is a proportion of the total Nominal Capital of the company. The word "nominal" is important because the true value of a business varies from day to day, depending on how successful it is and the general economic climate at the time. The "Nominal Capital" provides a fixed reference point to divide up ownership and voting rights in the company. A Shareholder's proportion of ownership is calculated by comparing the number of Shares he or she owns with the total number of Shares that have been issued out of the Nominal Capital.