Forming a Private Limited Company
Following the recent updates in the governmental Small Business, Enterprise and Employment Act, there has been an alteration in the compliance procedure when forming a Private Limited company (The most popular business structure in the UK). The following are the legal details to be presented to the Companies House or Formation Agent when forming a Private Limited Company. Unless otherwise stated the following are contained in the public register of companies.
1. Company Name (Must be unique and approved)
In case your name exists in the database, you shall be notified.
2. Registered Office
This refers to the companies’ address which must be based in the UK.
3. The names of the Directors
These are the people that are entrusted with the responsibility of running and managing the company. Every registered company must have at least one person as the director or act as one.
The following are the legal requirements when appointing a director:
- Full Names
- Date of Birth (Month and Year are available on the public register, however the date isn’t provided.)
- Country of residence
- Service Address (The official directors’ address which is different from residential address)
Provided there is at least one person who has been appointed as a director, another company can always be appointed as a director. This happens because of the fact that a company, despite being a separate legal entity, cannot be its own director.
- Company name
- The names of the authorizing persons
- Country registered
- Registration Number
- The applicable government laws
- Legal form
4. The Names of the Shareholders
This refers to the person or institution that owns shares of a company legally. It is allowed to form a company limited by shares with one person acting as a director and a shareholder at the same time. The following are the legal requirements when appointing a shareholder.
- The full names
- Relevant Addresses
- Share allotment
During the process of private limited company, it is impossible for a company to act as its own shareholder. It would require another company to take up the role. In order to appoint a corporate shareholder, the following details must be provided.
- Company Official Name
- Authorizing person’s name
- Allotment of shares
5. Standard Industry Classification Code (SIC)
The SIC Code refers to a5-digit number that identifies the industry within which every registered company belongs. If you aren’t sure of the industry you belong simply use the code 82990 and identify your industry. From time to time, you can always update the SIC code whenever you are filling a legal confirmation statement or any other applicable transaction.
6. People with Significant Control
In a move to enhance transparency in business, especially in clearly identifying those entrusted with the responsibility of running and owning the business, this section has been introduced. In accordance to the government business regulations, a person is considered to have significant control if he/she:
- Owns more than 25% of the company shares
- Has more than 25% of the company voting rights
- Holds the legal right to appoint or remove majority of the directors from office
- Has the right to or exercises full control over the business
- Has the right to or exercises full control over a company or trust that meets one of the above conditions.
A person considered to have significant control must provide the following for documentation purposes. The nature of control must also be indicated.
- Date of birth
- Country of residence
- Service address
Note: The physical address is not included in the public register unless it also serves as the service address.
In the past, the role could be taken by a person who was responsible for other administrative tasks. If for instance, one decides to appoint a secretary, he or she will have to document their full names and their service address.
7. Memorandum and article of Association
These two are legal documents that outline how a company is governed and run. There are formation agents that provide Memorandum & article of association that can suit a majority of companies. The only requirement is to provide all the legal information required to form a private limited company.
Forming a private limited company is as complicated as many people think, and in many occasions appears to be much more tax effective than running a business as self-employed.