How to Incorporate a Business: Registration Process Demystified

When you register your business you will be required to prepare various documents which are outlined below. These documents must be sent to the Companies House in Cardiff unless you use another method of incorporation such as electronic incorporation.

Before filling out any forms, you must give careful consideration to the type of company you want to register:

1. Company limited by shares (which can be either public or private):

   • Company set up with share capital. The liability of each member is the nominal value of the shares they have taken up.

2. Company limited by guarantee (can only be private):

   • Company owned by guarantors that pay a guarantee in the form of a fixed sum of money. The liability of each guarantor is the financial guarantee they give in the event of liquidation (which is outlined in the statement of guarantee).

3. Unlimited company (can only be private). 

   • Where the directors are legally liable to the creditors of the company. This means they have a personal liability to meet the company's financial liabilities in the event of liquidation, etc. 

It is important to distinguish between private and public companies. The primary difference is the means of financing. A public company can appear on the stock exchange, meaning, they may sell stock and bonds to the public for funding and investments. In contrast, a private company cannot fund itself this way. Private companies may still get funding by selling a limited amount of shares, but cannot offer these shares to the general public. 

Most start-ups tend to be private limited, instead of public limited, due to the high capital threshold of public companies. Shares must be issued to members of the public to the value of £50,000 before the public limited company can trade. 

You also need to be aware of two crucial documents: 

1. Memorandum of Association: a statement outlining the intention that the persons in question wish to form a company in accordance with the Company Act 2006 (CA 2006); and 

2. Articles of Association: essentially the specific constitution governing the business' day-to-day running. Companies can either register their own articles or make use of the model articles (templates) which can be found here.

For incorporation to be successful a business must register the following documents which can be found in Form IN01:

Registration documents	Explanation
Proposed name for the company	The name of your company cannot already be in use. This can be identified by using the company name checker here.  “Same as” names are not allowed. For example, where the name is similar and only differentiated by certain punctuation or a symbol. “The Clinics Ltd” is the same as “The Clinic’s Ltd”.  Your company name cannot be too similar to another company’s. For example, you wouldn’t be allowed to use the name “Toys Are Us”, if “Toys R Us” was registered before you.  Offensive and sensitive words, such as swear words or words that suggest an affiliation with a government company respectively, must be avoided. Several words are protected by legislation, which you need to be aware of when choosing your company name.  You can trade using a different name to your company name, this will be your “business name”.
Type of company and intended business activities	What type of company is it? I.e. limited by shares; public or private; etc. The principal intended business activities of the business can be determined by consulting the condensed list of Standard Industrial Classification (SIC) of economic activities. This classification system is available here.
Details of registered office	Your company needs a registered office. This allows a delivery address for all written communications. This is integral as your company cannot be incorporated without a registered address.  The only rules, here, are that it must be a physical address in the UK and within the same country your company is registered in.
Proposed articles association	Form IN01 will indicate whether you are opting for your own articles of association or using the model articles of association. If you do make amendments to the model articles of association, guidance suggests you include a copy of the amendments along with the model articles.
Statement of capital and initial shareholding	A statement that: - Provides the class and number of shares taken by each subscriber, including the nominal value of each share and (and if applicable) the amount remaining to be paid. - Information that identifies the subscribers to the memorandum.
Statement of guarantee (only if company is to be limited by guarantee)	This is a provision/ guarantee that if the company is wound up, the members (at the current time and those who ceased acting within the previous year) will contribute to the liability costs, debts, charges, etc. involved in the winding up process. Along with this guarantee there should be information sufficient to identify the subscribers.
Statement of proposed officers of the company	This statement should include:  - person/s to be named as directors - minimum of one director for a private company and two directors for a public company; - a statement including all relevant personal details of the named individuals;  - a public company must also have at least one private secretary; and  - outlining that each person named has consented to act in such a capacity.
Statement of initial significant control	This statement should outline whether there will be anyone who will fall under Persons with Significant Control (PSC) - registrable person or registrable legal entity in relation to the company. If there is no PSC a statement outlining this should be provided.
Statement of compliance	A statement of compliance as to the registration requirements having been met must also be delivered to the Registrar, with the registration documents.

The effect of registration and fees

A company will be brought into existence once the Registrar issues the certificate of incorporation which will take: 

• 7 days if the application is made using the normal service which is £40; 

• 24 hours for the expedited service which is £100; 

• Same day for electronic incorporation at a fee of £30. 

• £20 - payable for registration non-electronically and the process takes about 5 working days; 

• £50 - process for same-day basis so long as the documents are presented before 3 pm; 

• £15 - for electronic registration.

Post-Completion 

After you have completed registering your company, you must also remember to set up a business bank account and register your newly incorporated company for corporation tax; this has a deadline of 3 months into trading. 

- Authors: Niccolo Guastella, Tanisha Shah and Ilona Munn

- Authors: Niccolo Guastella, Tanisha Shah and Ilona Munn

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DISCLAIMER

This article has been written by law students for the sole purpose of providing informative insight. The information in this article is intended for educational purposes only and does not constitute legal advice, nor should the information be used for the purpose of advising clients. You should seek independent legal advice before relying on any of the information provided in this article.

Sources

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