Table of Contents
There are different business structures to choose from when deciding to open a new business, each with its own advantages and disadvantages. One such business structure is registering as a limited company. To do so, you will need to follow the correct process to incorporate your limited company. This article will define key concepts and walk you through the process of incorporating your company.
Limited Companies
Most of the limited companies in the UK are companies limited by shares. However, you can also incorporate a company limited by guarantee. This article assumes you will be incorporating a company limited by shares.
Companies House is the public body that regulates the formation and governance of companies in the United Kingdom. They have an electronic filing service for new incorporations that allows you to incorporate your company online without having to submit any forms via post.
In addition to incorporating your company yourself through the electronic filing service, you can choose to either instruct a solicitor or a company formation agent. This person can help prepare the company’s governance documents and can ensure your company is established correctly.
Key Corporate Governance Documents
The key documents that your company will put in place for incorporation will be the:
- articles of association (articles); and
- memorandum of association (memorandum).
Depending on the circumstances, the shareholders of the company may also enter into a shareholders agreement to further set out the rights and responsibilities of the parties in relation to the company. Unlike the articles and memorandum, a shareholders agreement is not a compulsory document and is not public.
Articles of Association
The articles of association are the written rules about running the company agreed by the shareholders, directors and the company secretary. You can either choose to use:
- the model articles of association; or
- bespoke articles of association.
The model articles will apply by default to any company to the extent that a company’s registered articles do not modify or exclude it. Most companies will choose to use the model articles unless there are certain provisions that need amending in the specific circumstances. If so, a company can amend the model articles or adopt bespoke articles.
Where there are two or more shareholders or directors, you should consider seeking a solicitor’s advice on the effects of various provisions in the articles you will adopt. This may help you avoid amending the articles after the company has been incorporated. It will also help minimise the chance of any dispute arising between you and the other shareholders and directors.
Memorandum of Association
This is something of a formality, but each company must have at least one person who states that they agree to take one share each in the company. The memorandum of association is a legal statement signed by the initial shareholders agreeing to form the company.
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The Registration Process
To incorporate your company, you must prepare and file certain documents with the Registrar of Companies House.
As mentioned above, you can choose to do this yourself through the electronic filing system or by instructing a third party to file the company for you. However, by engaging the services of a solicitor to undertake this registration process, you will ensure that the company is established correctly.
Necessary Information
You will need the following information to complete the application for registration.
| Company type | In almost all cases, it will be a private company limited by shares. |
| Company name | You should cross-check this name against any other existing companies. There are also rules around names that can be registered. For example, the name cannot be offensive, contain a sensitive word or expression, or suggest a connection with the government or local authorities (unless you get permission). |
| Address of the company’s registered office | This should be the principal place you will be doing business. |
| Document of capital and initial shareholdings | A statement referring to how many shares your company will issue, at what value per share and who will be receiving the shares. |
| Statement of your company’s proposed officers | A statement listing the company directors and their address. |
| Statement of those that will have “significant control” at the time of incorporation | You will need to confirm the persons with significant control over the company. Most persons with significant control are those who hold: ● more than 25% of shares in the company; ● more than 25% of voting rights in the company; and/or ● the right to appoint or remove the majority of the board of directors. |
Effect of Registration
The Registrar will review the information provided and determine whether to incorporate the company or not. Your company will come into existence when the Registrar issues the certificate of incorporation.
The issuance of the certificate means that any “subscribers” (i.e. those named in the memorandum of association) will become shareholders (also called “members”). Likewise, those named as directors will be deemed to be appointed.
It would be best if you did not do any business on behalf of the company until the Register issues the certificate. This is because the law can hold you personally liable for any contracts you enter into before your company’s proper incorporation.
After Incorporation
Understanding the Director’s Duties
Assuming you nominate yourself as one of your company’s directors, you will assume many responsibilities and obligations. As a company director, your duties include a duty to:
- promote the success of your company and exercise independent judgment and reasonable care, skill, and diligence;
- avoid conflicts of interest and not to accept bribes or other third-party benefits;
- not to act without authorisation or in excess of what your company articles permit; and
- declare any interest in a proposed transaction or arrangement.
Practical Considerations
After company incorporation, there are several important things you should do. If you have more than one director, you should convene a board of directors meeting and determine certain particulars such as:
- documenting the fact of incorporation;
- accounting for all costs associated with the incorporation;
- deciding when the company’s accounting date should be;
- appointing a chair of the board and any other directors;
- granting service contracts to the relevant directors;
- appointing key advisers such as accountants and solicitors;
- determining if you should issue any further shares;
- transferring assets and liabilities into the company’s name; and
- registering with HM Revenue and Customs to meet any tax obligations.
Depending on the initial steps taken, you may need to file additional documents with Companies House.
This template refers to the minutes of the first meeting of the directors of a Company.
Record Keeping
Additionally, you must keep and maintain the following records on file:
- the company’s members registry;
- a register of directors (and company secretary, if applicable);
- all resolutions and minutes from shareholder and board meetings;
- copies of all service contracts;
- a register of any charges concerning loans issued by the company; and
- a registry of the “Persons with Significant Control”.
You can also choose to hold this information on the Companies House’s central registry. This means your company will not have to keep these records available for inspection.
Key Takeaways
Incorporating your company can be a straightforward process, especially if you understand the key terms and have all the relevant information to hand. You can file all the necessary paperwork electronically for a small fee and have your company up and running in as little as 24 hours. You can also instruct a professional service provider, like a solicitor, to complete the process for you and ensure that the company is established correctly.
If you need help incorporating your business or advice on how best to structure it, our experienced corporate lawyers can assist as part of our LegalVision membership. For a low monthly fee, you will have unlimited access to lawyers to answer your questions and draft and review your documents. Call us today on 0808 196 8584 or visit our membership page.
Frequently Asked Questions
There are different business structures to choose from when deciding to open a new business, each with its own advantages and disadvantages. One such business structure is registering as a limited company. To do so, you will need to follow the correct process to incorporate your limited company. This article will define key concepts and walk you through the process of incorporating your company.
Limited Companies
Most of the limited companies in the UK are companies limited by shares. However, you can also incorporate a company limited by guarantee. This article assumes you will be incorporating a company limited by shares.
Companies House is the public body that regulates the formation and governance of companies in the United Kingdom. They have an electronic filing service for new incorporations that allows you to incorporate your company online without having to submit any forms via post.
In addition to incorporating your company yourself through the electronic filing service, you can choose to either instruct a solicitor or a company formation agent. This person can help prepare the company’s governance documents and can ensure your company is established correctly.
Key Corporate Governance Documents
The key documents that your company will put in place for incorporation will be the:
- articles of association (articles); and
- memorandum of association (memorandum).
Depending on the circumstances, the shareholders of the company may also enter into a shareholders agreement to further set out the rights and responsibilities of the parties in relation to the company. Unlike the articles and memorandum, a shareholders agreement is not a compulsory document and is not public.
Articles of Association
The articles of association are the written rules about running the company agreed by the shareholders, directors and the company secretary. You can either choose to use:
- the model articles of association; or
- bespoke articles of association.
The model articles will apply by default to any company to the extent that a company’s registered articles do not modify or exclude it. Most companies will choose to use the model articles unless there are certain provisions that need amending in the specific circumstances. If so, a company can amend the model articles or adopt bespoke articles.
Where there are two or more shareholders or directors, you should consider seeking a solicitor’s advice on the effects of various provisions in the articles you will adopt. This may help you avoid amending the articles after the company has been incorporated. It will also help minimise the chance of any dispute arising between you and the other shareholders and directors.
Memorandum of Association
This is something of a formality, but each company must have at least one person who states that they agree to take one share each in the company. The memorandum of association is a legal statement signed by the initial shareholders agreeing to form the company.
The Registration Process
To incorporate your company, you must prepare and file certain documents with the Registrar of Companies House.
As mentioned above, you can choose to do this yourself through the electronic filing system or by instructing a third party to file the company for you. However, by engaging the services of a solicitor to undertake this registration process, you will ensure that the company is established correctly.
Necessary Information
You will need the following information to complete the application for registration.
| Company type | In almost all cases, it will be a private company limited by shares. |
| Company name | You should cross-check this name against any other existing companies. There are also rules around names that can be registered. For example, the name cannot be offensive, contain a sensitive word or expression, or suggest a connection with the government or local authorities (unless you get permission). |
| Address of the company’s registered office | This should be the principal place you will be doing business. |
| Document of capital and initial shareholdings | A statement referring to how many shares your company will issue, at what value per share and who will be receiving the shares. |
| Statement of your company’s proposed officers | A statement listing the company directors and their address. |
| Statement of those that will have “significant control” at the time of incorporation | You will need to confirm the persons with significant control over the company. Most persons with significant control are those who hold: ● more than 25% of shares in the company; ● more than 25% of voting rights in the company; and/or ● the right to appoint or remove the majority of the board of directors. |
Effect of Registration
The Registrar will review the information provided and determine whether to incorporate the company or not. Your company will come into existence when the Registrar issues the certificate of incorporation.
The issuance of the certificate means that any “subscribers” (i.e. those named in the memorandum of association) will become shareholders (also called “members”). Likewise, those named as directors will be deemed to be appointed.
It would be best if you did not do any business on behalf of the company until the Register issues the certificate. This is because the law can hold you personally liable for any contracts you enter into before your company’s proper incorporation.
After Incorporation
Understanding the Director’s Duties
Assuming you nominate yourself as one of your company’s directors, you will assume many responsibilities and obligations. As a company director, your duties include a duty to:
- promote the success of your company and exercise independent judgment and reasonable care, skill, and diligence;
- avoid conflicts of interest and not to accept bribes or other third-party benefits;
- not to act without authorisation or in excess of what your company articles permit; and
- declare any interest in a proposed transaction or arrangement.
Practical Considerations
After company incorporation, there are several important things you should do. If you have more than one director, you should convene a board of directors meeting and determine certain particulars such as:
- documenting the fact of incorporation;
- accounting for all costs associated with the incorporation;
- deciding when the company’s accounting date should be;
- appointing a chair of the board and any other directors;
- granting service contracts to the relevant directors;
- appointing key advisers such as accountants and solicitors;
- determining if you should issue any further shares;
- transferring assets and liabilities into the company’s name; and
- registering with HM Revenue and Customs to meet any tax obligations.
Depending on the initial steps taken, you may need to file additional documents with Companies House.
This template refers to the minutes of the first meeting of the directors of a Company.
Record Keeping
Additionally, you must keep and maintain the following records on file:
- the company’s members registry;
- a register of directors (and company secretary, if applicable);
- all resolutions and minutes from shareholder and board meetings;
- copies of all service contracts;
- a register of any charges concerning loans issued by the company; and
- a registry of the “Persons with Significant Control”.
You can also choose to hold this information on the Companies House’s central registry. This means your company will not have to keep these records available for inspection.
Key Takeaways
Incorporating your company can be a straightforward process, especially if you understand the key terms and have all the relevant information to hand. You can file all the necessary paperwork electronically for a small fee and have your company up and running in as little as 24 hours. You can also instruct a professional service provider, like a solicitor, to complete the process for you and ensure that the company is established correctly.
If you need help incorporating your business or advice on how best to structure it, our experienced corporate lawyers can assist as part of our LegalVision membership. For a low monthly fee, you will have unlimited access to lawyers to answer your questions and draft and review your documents. Call us today on 0808 196 8584 or visit our membership page.
Frequently Asked Questions
What is a limited company?
A limited company is a type of business structure in the UK that is legally separate from its owners. It can be limited by shares or by guarantee.
What are the advantages of incorporating a limited company?
Incorporating a limited company provides benefits such as limited liability for owners, potential tax advantages, and increased credibility with customers and suppliers.
What is the role of the Companies House in the incorporation process?
Companies House is the public body that regulates the formation and governance of companies in the UK. It offers an electronic filing service for incorporating new companies.
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