The investment climate in UK is known to be very auspicious and attractive for investors of various industries. According to the records, over 5,7 million private entrepreneurs running their business in the country. However, some questions concerning the company foundation procedure still appear to be a stumbling rock for many to set up.
The first thing, that should be thoroughly reasoned out before incorporating is a type of the company. Main markers, which will help classify your business, are: core target of the company, ownership conditions, liability and management structure. Today private limited companies prevail in the UK market. They are founded under the Companies Act 2006.
Every individual willing to launch a business project will inevitably have to deal with following stages of company incorporation before providing the data to the Registrar of Companies:
- Constitutional documents
The legal and management basis of the company consists of:
1) The Memorandum of Association. This small document declares a founder’s desire to set up business and incorporate a company with other members.
2) The Article of Association. It is a core document containing comprehensive and thorough provisions on company’s scope of work, which should be approved by members. It states general resolution and decision-making methods inside the company and defines general order of holding the meetings, appointing members of the board, dealing with shares. This part is very important for making sure that the structure will work without a hitch. A company can use Statute Model Forms as basis to develop provisions or discuss and practice their own Bespoke Articles.
- 2. Company name
Main demands to a private limited company in UK are:
1) It should be unique. It is not allowed to create a company with the same name as existing and operating one or differing only by index (e.g. ‘Grand Design Ltd.’ is identical to ‘Grand Design (UK) Ltd.’ according to the regulations).
2) It should be free of sensitive expressions. Using words that show national supremacy, sponsorship or protection of government or some organizations, special business status or functions in the name of the company is only possible under official permission of Secretary of the state or other legal body.
3) It cannot contain any words or phrases associated with royalty.
4) It is created without using symbols like # and @, characters and punctuation signs.
5) It should be respectful and avoid insults of any kind.
6) It has word ‘Limited’ or Ltd’ (or the Welsh variant) in the end.
- Official headquarter
The company must have officially registered physical address to receive mail and be able to work with Companies House and HM Revenue and Customs. This address will be also used for online inspection of company statutory registers by public. In case if it is not desirable, company can set up a single alternative inspection location (SAIL).
All the company documents, stationery and digital forms of information that represent the entity should contain the address.
- First officers
A company should be run by a living individual, not younger than 16 years, who wasn’t divested from management. There is always at least one director in the company. Despite the fact that a corporate body can be a director, it is still has to be represented by natural person, acting as a director. Entities preferably have not less than two directors to avoid failure of the business structure in case if director lays down the duties or for some reasons is incapable of working.
The guiding clauses for managing and distributing duties and affairs by directors are presented in the Articles of Association. Also, it contains paragraphs on appointing a fiduciary, listing his opportunities and responsibilities, granted by company members in compliance with the law and contract provisions.
It is possible to run the company from abroad. In such case directors must file the data of their residential address to Companies House. Registered office address can be used as a service one, which will provide anonymity of residential address on public resources.
- Company Secretary
- The company secretary can be represented by a private person or a corporation. It is not obligatory to have a company secretary in a private limited entity as his functions can be rendered or distributed among members. However, if the Articles of Association contains provisions that require a company secretary, there has to be one.
- Statement of capital
The Article of Association includes the information about the capital of the company and structure of shares, which may be represented by different classes, having distinguishing rights such as capital, dividend, voting and redemption rights.
- Persons with significant control
Legal system of UK strives to implement a transparency and trustworthy policy towards companies and customers. For those reasons any person with significant control should be registered to display a real situation on who owns and controls the company. This measure is aimed at inhibiting money laundering and sanctioning law violators. At the top of that, it should optimize corporate behavior.
An individual or legal entity, having one or more rights related to ownership, voting, directors’ appointment or company affairs management, is considered to be a person with significant control.
IQ Decision provide legal advice all along the way of the incorporation of company and its’ further activity in the market.