By Carolyn Arlett
What are your intentions for setting up a company in the UK?
One of the first considerations to determine the type of entity to incorporate is to establish your intentions by looking at the purpose of the corporate structure, ownership, liabilities and management of the company.
There are four options:
- Private Company Limited by Guarantee
- Public Limited Company
- Limited Liability Partnership
- Private Company Limited by Shares
The most common corporate structure set up in the UK is a Private Company Limited by Shares (referred to locally as a UK Limited Company), incorporated under the Companies Act 2006, which accounts for 96% of all corporate bodies.
They are straightforward to set up and the administrative burden is relatively light.
UK Limited Company
A UK Limited Company is a separate legal entity and the owners’ liability is limited to the amount invested in the company. A Limited Company is a separate and distinct legal entity from its Shareholders and Directors.
A company will normally be treated as solely responsible for the debts it incurs and the obligations which it enters into, notwithstanding that it requires individuals (the Directors of the company) to act as its agents and to enter into arrangements on its behalf.
These are some key areas to address and information to provide to the Registrar of Companies when applying to set up a UK Limited Company as follows:
Choose a company name
A company can choose any name provided it is distinctive, does not contain sensitive or restrictive words or expressions and ends in Limited or Ltd. Our team can confirm in advance of application whether your preferred company name is available and acceptable.
Create constitutional documents governing the company
The Memorandum of Association is a short document confirming the subscriber’s intention to form the company and to become members of that company on incorporation.
The Articles of Association is the company’s principal constitutional document. It should contain detailed administrative provisions of the company’s operations agreed by its members. It sets out how decisions are taken by the members and directors, as well as various matters connected with the shares, general meetings of the members, appointment and powers of directors, board resolutions and notices, helping to ensure that the company’s business runs as smoothly and efficiently as possible.
Establish a registered office address
The company must have a physical address in the UK. This is where official communications will be sent and this address will be publicly available on the online register. We can provide you with a Central London registered office address and mail forwarding service.
Decide who the Directors will be
A UK Limited Company must have at least one Director who is a living individual, at least 16 years of age and not disqualified from being a Director. A corporate body can act as a Director, but if a corporate Director is appointed, there must also be at least one Director who is a natural person. Directors have fiduciary, common law and statutory duties and accepting the role of Director should be an informed decision. We can provide advice and Director services for you.
Appoint a Company Secretary
The Company Secretary shares legal responsibilities for certain duties under the Companies Act 2006 with the company Directors. Although there is no longer a legal requirement for private companies to appoint a Company Secretary, if one is not appointed, the associated responsibilities fall upon the Directors. Many private companies employ a Company Secretary to reduce the administrative and corporate governance burdens. We can provide expert Company/Corporate Secretarial services.
Publish a Statement of Capital
This statement provides the details of the company’s share structure and value. Where required, different classes of shares with different rights such as voting, dividend, capital and redemption rights can be set up.
Outline ‘Persons with Significant Control’
A person with significant control is an individual (person or registrable legal entity) who meets one or more conditions relating to share ownership, rights to exercise, voting rights, appointment of directors or who exercises control of the company. Any person with significant control must be registered on incorporation. The purpose of this is to improve corporate trust and transparency by making it clear who ultimately owns and controls UK companies.
We can advise you on each of these areas and ensure that your UK company is incorporated without undue delay.
What about the key ongoing requirements once the company is set up?
The Companies Act 2006 made a number of changes to make it easier to run a Limited Company. In the ongoing quest to promote enterprise, the government continues to examine ways to give companies the freedom to get on with business rather than administrative formalities. There are no separate business registration or general business license requirements. The exception may be if the company is operating in a regulated sector or plans to undertake certain activities in specific industries.
Nevertheless, all UK companies must:
- File annual financial statements which conform to applicable accounting standards
- Submit an annual tax return
- Maintain statutory registers and a record of all income and expenditure
- File a Confirmation Statement annually plus other event driven filings, such as when directors or owners change
Additional requirements will apply when the company becomes VAT registered or starts to employ staff.
Small companies are generally exempt from audit in the UK unless they form part of a larger group which exceeds certain limits.
How ZEDRA can help
ZEDRA’s expert team of UK Corporate Structure, Incorporation, Company Secretary, and Director specialists are available to discuss your specific circumstances. In addition, to the corporate compliance requirements mentioned above, corporate bank account opening can be as much of a challenge in the UK as it is elsewhere for newly incorporated companies; however we can provide the short to medium term solution of a client bank account when we also provide certain outsourced services. Contact Carolyn Arlett or Soledad Garcia to find out how we can help you.