Is the ownership and control of a limited company legally separate?

The correct answer is that the ownership and control of a limited company are legally separate. This principle is foundational to company law and reflects the distinct legal status of a limited company as an entity separate from its owners (shareholders) and managers (directors).

In a limited company, shareholders own the company through their shares, entitling them to a proportion of the profits (dividends) and some say in company decisions, typically through voting rights. However, the day-to-day management and decision-making belong to the directors, who may or may not be shareholders. This separation allows for clearer delineation of responsibilities and liabilities. The shareholders are not personally liable for the debts of the company beyond their initial investment, reinforcing this legal boundary.

The incorrect options may stem from a misunderstanding of how different types of limited companies operate. Private and public limited companies both maintain this separation, so it is not exclusive to one type. Therefore, ownership and control are always considered legally separate in the context of limited companies.