How Many Shares Should My Limited Company Have, and What Is Each One Worth?

A UK limited company must have at least one share, and there is no upper limit on how many it can issue. Most small companies start with either a single share or a round number such as 100, and give each share a nominal (face) value of £1. The number of shares simply divides up ownership; what matters is the percentage of the company each shareholder holds.

That is the short version. The rest of this guide explains how to choose a sensible number when you form your company, the difference between what a share is worth on paper and what it is worth in reality, and how single and multiple shareholders change the picture.

A share is a unit of ownership in a limited company. Each one represents a slice of the business and, crucially, a percentage of ownership. If your company issues 100 shares and you hold all 100, you own 100% of it. Split those 100 shares between five people holding 20 each, and each person owns 20%.

The shares you create when you incorporate are called ordinary shares. These are the standard type: they usually carry one vote each, an equal right to dividends, and an equal claim on assets if the company is ever wound up. You can introduce other share classes later, but almost every new company starts life with plain ordinary shares.

There is no single correct answer, which is why the question trips people up. Here is how to think about it.

• The legal minimum is one share. A company limited by shares must have at least one share and therefore at least one shareholder. If you are forming the business on your own, a single £1 share is perfectly valid and keeps things simple.
• There is no maximum. You can issue as many shares as you like, hundreds, thousands, or more. The number itself has no legal significance; it is only a way of dividing ownership.
• 100 shares is the popular default. Many small UK companies issue 100 ordinary shares of £1 each. It is a tidy, round number that makes ownership percentages obvious: one share is 1%, and 60 shares is 60%. No calculator required.

So how many shares should you start your company with? For most founders in the UK, the honest answer is: enough to divide ownership cleanly among the people involved, and no more. If it is just you, one share works. If you have a co-founder and you want a clean 50/50 split, two shares (or 100, split 50/50) does the job. Think about who owns what first, then pick a share count that expresses those percentages without awkward fractions.

A quick tip: if you expect to bring in a third partner or offer a small slice to an early employee later, starting with 100 shares gives you more room to carve out precise percentages (say, a 5% stake) than starting with just two or four.

This is where two very different meanings of “worth” get confused.

Nominal value (also called par value) is the face value printed against each share, commonly £1. It is essentially the minimum the share can be issued for; under the Companies Act 2006 a company cannot issue shares for less than their nominal value. Setting the nominal value at £1 is popular for two practical reasons:

1. It makes the maths easy. If someone buys or sells shares, or an existing shareholder cashes out, the paper value is instantly clear.
2. It keeps a shareholder’s liability low. In a limited company, a shareholder’s financial liability is limited to the amount unpaid on their shares. With a £1 nominal value, the most any shareholder can be asked to contribute towards company debts is £1 per share they hold. Set the nominal value at £100 a share and that exposure jumps to £100 per share.

Market (real) value is completely separate. It is what the shares are actually worth based on the company’s assets, profits and future prospects. A company that issued 100 shares at £1 each has a nominal share capital of £100, but if the business is thriving, those same 100 shares might be worth tens or hundreds of thousands of pounds if you came to sell. The nominal value never changes; the real value moves with the health of the business.

In short: nominal value is an accounting and legal figure, not a valuation. Do not read your company’s true worth off its share capital.

One shareholder. If you own 100% of the company, you make the decisions and take all the dividends. A single share, or 100 shares all held by you, works equally well.

Multiple shareholders. Once ownership is shared, the split matters more than the raw number of shares. Decide the percentages you all agree on, then set a share count that reflects them cleanly. A few points worth knowing:

• There is no limit on the number of shareholders a private limited company can have.
• Certain decisions need shareholder approval by resolution, an ordinary resolution needs over 50% of the votes, and a special resolution (for bigger changes like altering the articles) needs 75%. That is why founders often care about crossing those thresholds, not just holding “most” of the shares.
• It is well worth putting a shareholders’ agreement in place early, setting out what happens if someone wants to leave, sell, or if you disagree. It is far cheaper to write when everyone is on good terms.

Most companies never need more than ordinary shares, but you can create different classes to treat shareholders differently, for example, giving one class dividend rights but no votes, or the reverse. This is common when you take on an investor, reward staff, or want a family member to receive income without a say in running the business. You can change the allocation and classes of your shares later by passing the appropriate resolution and updating Companies House. Getting the structure right early, though, saves reshuffling down the line, something we help scaling businesses plan for through our outsourced finance and FD support.

Deciding how to structure shares, classes and ownership as you grow is exactly the kind of thing we help founders get right. Give us a call on 01454 300 999 or email [email protected] and we will point you in the right direction.