A. COMPLIANCES FOR INCORPORATION
When setting up a business in the UK there are a number of options potentially available, including working as a sole trader (i.e. running the business as an individual with full responsibility for the legal and financial affairs of the company), engaging an agent, forming a partnership, establishing a branch office of a foreign corporation or incorporating a company in the UK.
If a company is to be incorporated, there are various types of company that can be formed – this note looks at the formation of a private limited company under the Companies Act 2006, which is the most common type of company used in the UK.
To incorporate a private limited company, it is necessary to:
- Prepare articles of association – these are the rules that govern the running of the company and set the powers of the directors, alongside statutory requirements; either standard (or model) forms of articles that can be used, or bespoke articles drafted • Determine the capital structure of the company and prepare a memorandum of association – it is necessary to determine how many shares the company will issue and give these a nominal (or per) value, which can be in any currency. The first shareholders will sign the memorandum of association to subscribe for their shares
- Appoint a board of directors – a private limited company must have at least one director, and a company secretary may also be appointed (but this is not required)
- Choose a company name – the name cannot be the same as any name on the register of companies. The use of certain words is prohibited and certain words (such as ‘international’, ‘UK’, ‘association’) can only be used with the prior approval of the Secretary of State or other designated authority
- Determine a registered office – this need not necessarily be where the company operates in the UK but must be an address where legal and other notices can be served on the company. Many auditors, service companies and law firms (including Clyde & Co through its dedicated Company Secretary unit) provide registered office services
- Appoint auditors – they must be members of a recognised supervisory body of accountants established in the UK
- Prepare details of persons with significant control (PSCs) and relevant legal entities (RLEs) in relation to the company – these PSCs and RLEs must be disclosed at the time of incorporation and updated in accordance with the Small Business Enterprise and Employment Act 2015 Once these items are prepared, incorporation takes place by filing an IN01 form at Companies House together with a fee (currently £12 for web-filing, £40 for the standard paper service and £100 for same day service using paper forms). Incorporation is complete when Companies House issues a certificate of incorporation – this can be completed within 24 hours when using the same day service, and usually for web-filing too.
B. POST INCORPORATION REGISTRATIONS
Promptly following incorporation, a company is automatically contacted by Her Majesty’s Revenue and Customs (HMRC) in order to register for Corporation Tax purposes. Companies also need to check whether they must register for Value Added Tax (VAT), which is paid on the supply of goods and services in the UK – this should be attended to promptly and exemptions are available only for the smallest companies.
After incorporation, private limited companies have ongoing obligations to make filings with Companies House if changes are made to their registered details and following certain corporate actions. Web-filing is well established for such notifications and is quick, easy and relatively cheap.