Contributed By Hawkins Hatton Corporate Lawyers Ltd
Entities available to investors to hold real estate assets include limited liability partnerships, private limited companies and public limited companies.
Limited liability partnerships are comprised of members who are in partnership with limited liability. The relationship between the members is usually governed by a members’ agreement. An LLP is taxed in the same way as a partnership.
Private limited companies are comprised of shareholders who own share capital of the company proportionally to their individual levels of capital investment. Directors (who may or may not include shareholders) are appointed to run the company. The shareholders have personal liability protection, and their relationship is governed by a shareholders’ agreement. This entity is liable to corporation tax and shareholders only pay tax on dividends.
A public limited company is a limited liability company whose shares may be sold and traded to the public and listed on a stock exchange. It can therefore raise money by the sale of shares to the general public.
Limited liability partnerships are governed by UK company law but, unlike in the case of limited companies, members of an LLP can manage their own interests without forming a board.
Private limited companies are governed by the Companies Act 2006 and have a constitution (Articles of Association) to assist the shareholders and directors with regulating their relationship with the company and each other.
Unlike private limited companies, public limited companies require at least two directors and a company secretary. It is otherwise governed by UK company law. If a PLC is trading on a stock exchange it will also be subject to the regulation of that exchange.
The costs of annual entity maintenance and accounting compliance vary subject to the extent of the portfolio of properties owned by each entity.