There is a lot to consider when setting up a company in the UK.One of the first matters to be decided is the structure of the company to be incorporated. This is typically determined by looking at the purpose, ownership, liabilities and management of the company. The most common corporate structure in the UK is that of a private company limited by shares (‘private limited company’), which is incorporated under the Companies Act 2006.Outlined below are the key considerations when setting up such a private limited company.
1. Constitutional Documents
These documents govern the company and consist of the following.
- The Memorandum of Association – a short document stating that the subscribers wish to form a company and agree to become members of the company and, in the case of a company with a share capital, to take at least one share each.
- The Articles of Association – the company’s principal constitutional document. Articles regulate the internal affairs of the company. They form the basis of a statutory contract between the members, and between each member and the company. A company can either adopt a form of model articles defined by statute or adopt their own bespoke articles.
2. Company Name
A UK private limited company can choose any name provided that:
- It is distinctive – it cannot be identical to another name, or too similar to another name on the company index or effectively be the ‘same as’ an existing name already in use.
- It does not contain a sensitive word or expression – in some circumstances you would require official permission from the Secretary of State or other institution. Among others, a sensitive word or expression includes one that implies national pre-eminence, government patronage or sponsorship connections, business representative status or specific functions.
- There is no use of any words in connection to royalty.
- It does not contain certain characters, signs, symbols – those outside the alpha-numeric series and punctuation are restricted (such as @ and #).
- It is not offensive.
- The name ends with ‘Limited’ or Ltd’.
3. Registered Office
Your private limited company must have a physical address in the UK. This is where official communications will be sent, such as correspondence from Companies House and HM Revenue and Customs.
This address will be publicly available on the online register and will be the location where the public is able to inspect the statutory registers.
The address should be displayed on all company stationery, including emails and websites.
4. First Officers
The first officers consist of the following.
- Directors – a private 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 be at least one director who is a natural person. It is advisable to have at least two directors to ensure continuity should one of them resign or be unable to act. Upon incorporation, the name of the directors and their usual residential address must be filed at Companies House. The directors can choose to register a service address – which may be the same as the registered office address – so that their residential address is not available on the public record.
- Company secretary – a private limited company is not required to appoint a company secretary unless the company’s articles of association expressly require it to do so. The company secretary can be an individual or a corporation.
5. Statement of Capital
Companies with a share capital are required to prepare and file a statement of capital with Companies House on formation of the company. This statement provides the details of the company’s share structure and value. There can be different classes of shares with different rights such as voting rights, dividend rights, capital rights and redemption rights. These will be detailed in the company’s articles of association.
6. Persons with Significant Control
Any person with significant control (PSC) must be registered on incorporation.
A PSC is an individual (person or registerable legal entity) who meets one or more conditions relating to share ownership, voting rights, appointment of directors, or rights to exercise or exercises control of the company.