10.1 A company limited by shares is a separate legal entity established by persons, or other bodies, who agree to buy shares. The money raised from the sale of shares becomes the initial capital which the company invests in the business, and any profit, after tax, is then available for distribution to the shareholders as dividends. It is possible to have a company with unlimited liability, but in practice almost all companies take advantage of limited liability, so that the liability of each shareholder is limited to the sum which they have agreed to pay for their shares (the "nominal value" of the shares). The shareholders then appoint Directors to run the business. Directors can have additional personal liability for "wrongful trading" where the company is insolvent, and they fail to take all reasonable steps to minimise the loss to creditors.
10.2 A company is a very flexible form of joint venture, which can vary from a small private company, where the company regulates who can buy its shares, through to a public company whose shares are traded on the Stock Exchange. It can use the issue of more shares to raise additional capital, or it can borrow in its own name.
10.3 Because of the ability to distribute a profit to shareholders, a company limited by shares is suitable for a joint venture with a view to a profit, but cannot secure registration as a charity. As a result it cannot gain the tax advantages which are available to a charity.