INCORPORATION OF A COMPANY IN ENGLAND AND WALES

1.1 Incorporation: – Incorporation is the process by which a new or existing business registers as a limited company. A company is a legal entity with a separate identity from those who own or run it. The vast majority of companies are limited liability companies where the liability of the members is limited by shares or by guarantee. A business cannot operate as a limited company until it has been incorporated at the England and Wales Companies House (in Cardiff) under the Companies Act 2006.  Establishing your business as a company means the directors are required to file certain documents every year such as annual accounts and a confirmation statement. They must also inform U.K. Companies House about any changes, such as the appointment or resignation of directors or a change to the company’s registered office. It may be worthwhile seeking professional advice from a solicitor or accountant before deciding whether an incorporated company is the best way for you to run your business. 1.2 Who can incorporate a Company? One or more persons can form a company for any lawful purpose by subscribing their names to a memorandum of association. In law, ‘person’ includes individuals, companies and other bodies. By completing the memorandum, the subscribers are confirming their agreement to form a company. Children under 16 don’t have the legal capacity to enter into a contract. The registrar won’t normally accept an application for incorporation if she is aware that the subscribers are under 16. 1.3 Types of company There are four types of company:-

  1. Private company limited by shares: This company has a share capital and the liability of each member is limited to the amount, if any, unpaid on their shares. A private company cannot offer its shares for sale to the general public.
  1. Private company limited by guarantee: This company does not have a share capital and its members are guarantors rather than shareholders. The members’ liability is limited to the amount they agree to contribute to the company’s assets if it is wound up.
  1. Private unlimited company: An unlimited company may or may not have a share capital but there is no limit to the members’ liability.
  1. Public limited company: A public company has a share capital and limits the liability of each member to the amount unpaid on their shares. It may offer its shares for sale to the general public and may be quoted on the stock exchange. There is further information about public companies.
  • a private company limited by shares
  • a private company limited by guarantee (if you only have people as the guarantors and you’re not applying for an exemption from using ‘Limited’ in the company name)
  • a community interest Company (CIC).

1.4 Method and fees:- There are three ways to incorporate a company:- Electronic Software Filing:- Electronic incorporations can be submitted electronically through suitably enabled software. However, many incorporation agents and software providers have developed their systems to the point where they are able to offer customers a web-based electronic service (this is chargeable). This means that occasional as well as regular customers can apply for incorporation. Many of the businesses shown on our list of software suppliers provide web-based services and depending on the volume of filings you anticipate making, it may be more practical for you to use their services. More information about software filing and a list of providers. Paper filing:- Paper documents, which must be sent to the appropriate office, take longer to process than electronic documents.

  • company’s registered office is stated as being situated in Wales (“Welsh company”) and you file documents in the Welsh language (you can use the Web Incorporation Service for a private limited company)
  • company is an unlimited company

Cheques should be made payable to Companies House. Straight forward applications are normally processed within 5 days of receipt. 1.5 Documents required to incorporate a company:- To incorporate your company you must file the following documents:

  1. Application to register a company (form IN01) and the fee
  • Memorandum of association
  • Articles of association (unless you adopt model articles in their entirety)
  • Additional information if your application includes a sensitive word / Expression.

1.6 Proposed name:-You cannot reserve a proposed name. Companies Office cannot guarantee to process applications in strict order of the time or date we receive them. And generally, electronic documents are processed more quickly than paper documents. 1.7 The application to register a company (form IN01):-

  • The proposed company name
  • Where the company is situated – whether the registered office is in England and Wales, Scotland or Northern Ireland
  • The Registered office address – this must be in the same country your company is registered in, for example a company registered in Scotland must have a registered office address in Scotland
  • Whether the company will be private, public or unlimited
  • Details of the company’s intended business activities by reference to a Standard Industrial Classification Code (SIC)
  • Choice of Articles of Association
  • Details of the Proposed director(s), and the secretary if it has one
  • Details of (PSC) People with Significant Control, or other legally required statements such as a statement that the company does not have any PSC Directors’ service and residential addresses
  • A statement of capital and initial shareholdings or a statement of guarantee
  • If the proposed name contains a sensitive word and a section requiring confirmation that you have requested the views of a government department or other body.
  • A statement of compliance or guarantee

1.8 Registered office address, service address and usual residential address:- Registered office address is the company’s official address. This is where all written communication must be sent. If a third party use to handle agent to manage your mail, then make sure that the service includes sending all of your company’s mail to your registered office address.

The address must be:-

  • a physical address in the UK
  • in the same country your company is registered in, for example a company registered in Scotland must have a registered office address in Scotland.

A service address is one that can be used by a director to receive communications from third parties about the company. The service address can be the same as the person’s residential address, or the registered office address of the company, or it can be somewhere different. A usual residential address is the usual home address of the director concerned. Stakeholders must file this at Companies House but it will not be available on the public record for everyone to see. It’s held on a private register that’s only available to predetermined organisations. Memorandum of Association:-The memorandum of association confirms the subscribers’ intention to form a company and become members of that company on formation. In the case of a company that is to be limited by shares, the memorandum will also provide evidence of the members’ agreement to take at least one share each in the company. Under the Companies Act 2006, the memorandum is a much shorter document because all the constitutional rules of the company are contained in the articles of association. Consequently, the memorandum serves a more limited purpose and once the company has been incorporated, it cannot be amended. Information on capital and shareholdings is no longer part of the memorandum as it is contained in the application to register (form IN01) Articles of association:- A company’s articles of association are its internal rulebook, chosen by its members. Every company is required to have articles, which are legally binding on the company and all of its members. The articles of association help to ensure the company’s business runs as smoothly and efficiently as possible and will set out how decisions are taken by the members and directors as well as various matters connected with the shares. The articles cannot contain rules that are against the law. Provided the members observe this general principle they have complete freedom to choose which rules are included in the company’s articles, although they may find it convenient to rely on model articles as a default position. If the members decide to draw up their own rules as bespoke articles they may wish to obtain professional advice before proceeding. On incorporation a company, Company can adopt model articles in entirety, model articles with amendments or it can draft its own bespoke articles. Certificate of incorporation:- The certificate of incorporation is conclusive evidence that the requirements of the Companies Act 2006 as to registration have been complied with and that the company is duly registered under this Act. The certificate will state:-

  • the name and registered number of the company
  • the date of its incorporation
  • whether it is a limited or unlimited company, and if it is limited whether it is limited by shares or limited by guarantee
  • whether it is a private or a public company
  • whether the company’s registered office is situated in England and Wales, Wales, Scotland or Northern Ireland.
  • The certificate must be signed by the registrar or authenticated by the registrar’s official seal.