Forming a Limited Company

Establishing a limited company marks a significant milestone in formalising your business, providing advantages such as limited liability, credibility, and potential tax benefits. However, this process entails navigating through a series of legal and administrative procedures.

Outlined below are the crucial decisions and steps involved in setting up a limited company, from selecting the company type and name to completing the required paperwork and meeting post-incorporation obligations.

Whether you choose to manage the process independently or with the assistance of a specialised formation agent, as we recommend, grasping these fundamentals will ensure a seamless and compliant beginning for your business.

Key decisions include:

• Company Type: Decide whether the company will be a private or public company limited by shares, or a private company limited by guarantee.
• Purpose and Capital Requirements: Define the company’s objectives and determine its capital needs.
• Company Name: Ensure the proposed name is available and meets legal standards.

?Incorporation Procedures

?The Companies Act 2006 outlines the documentation required to form a company, which differs significantly from previous requirements. To incorporate a company, you must submit Form IN01, along with a Memorandum of Association, Articles of Association, and the correct registration fee.

• Memorandum of Association: This brief document evidences the intent of each subscriber to form the company and become a member. Companies are no longer required to state their objects, and the concept of authorised share capital has been removed.
• Articles of Association: New Model Articles have been introduced, available in three forms:

1. Private company limited by shares
2. Private company limited by guarantee
3. Public limited company

These Model Articles are written in plain English and are simpler than the previous ‘Table A’ articles. Companies may choose to adopt the Model Articles, amend them, or create bespoke Articles.

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Directors and Shareholders

• Directors: A company must have at least one director who is a natural person, aged 16 or older. For each director, the following details must be provided:
• Full forename and surname
• Any former names used for business purposes
• Full-service address (public record) and usual residential address (protected information)
• Country/state of residence, date of birth, nationality, occupation, and the number of shares they hold
• Security information required by Companies House (for electronic formation)
• Shareholders: Information required for each shareholder includes:
• Full forename(s) and surname
• Full address
• Number of shares held
• Details of individuals with significant control (e.g., more than 25% share or voting rights)

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Directors’ Service Addresses

Directors and company secretaries can now provide a service address instead of their residential address, which may be the company’s registered office. Companies must maintain two registers: one for service addresses and another for residential addresses (protected information). Home addresses are not made public, and access is limited to authorised entities (e.g., liquidators, police, HMRC).

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Post-Incorporation Matters

• First Meeting of Directors: After receiving the Certificate of Incorporation, the directors should meet to:
• Appoint key roles (chairperson, managing director)
• Appoint auditors (if needed)
• Issue and allot shares
• Approve banking arrangements and signatories
• Approve business contracts
• Disclose directors’ interests in company contracts
• Set an accounting reference date
• Convene a general meeting (if required)
• First General Meeting: This meeting is necessary to:
• Approve any substantial property transactions between the company and its directors ? Approve directors’ service contracts exceeding five years Returns and Other Matters

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Following the initial meetings, you must file the following with the Registrar of Companies:

• Form SH01 (Return of allotments of shares)
• Form AA01 (if changing the accounting reference date)

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Additionally:

• Prepare minutes of the first board and general meetings
• Issue share certificates
• Update the company’s statutory books
• Deposit shareholders’ capital into the company’s bank account
• Register for PAYE and VAT, if applicable. Establishing a limited company involves various steps.

?While the process may seem intricate, adhering to the requirements outlined in the Companies Act 2006 and following the correct procedures can help you lay a strong groundwork for your business.

?To simplify this process, consider enlisting the expertise of a specialised formation agent like Rock CSP. This can ensure that every aspect of the incorporation process is efficiently managed and complies with legal regulations. After forming your company, conducting initial meetings, submitting required returns, and maintaining updated statutory records are vital to upholding a good standing and preparing for future success.

?Get in touch with us to find out more about forming a limited company or for assistance with your limited company formation.

https://www.rockcsp.com/contact-us