Company Formation

Types of companies

Following are the 3 main types of companies that can be incorporated in the UK:

• Private Limited Company – These types of Companies generally have a share capital, and the liability of members is limited to the amount of shares that they possess
• A Private Company with limited Liability – These types of companies do not have a share capital, and the liability of the members is limited by the amount that they guarantee to contribute in case the company is being wound up
• Public Limited Company – These types of companies have a share capital, and the members are liable for only the unpaid amount on their shares. It is possible for a Public Limited Company to offer its shares to the public

At least one person is required in order to legally register a company. Further, every company is required to formally appoint company officers throughout its term of existence.

Anyone can be appointed as the Director of a company; however, there are a few exceptions. For example, a person who had been declared bankrupt in the past cannot become the Director of a company.

Selecting the company name

In order to incorporate a company, you need to select a name for it; however, there are various restrictions that are associated with this process. Following are some of the factors that you should consider while selecting a name your company:

• The name that you select should not be the same as, or similar to another company’s name
• Certain words, which relate to illegal activities or brand names, cannot be used in the name of a company

In case an objection is raised within 12 months of incorporation to the name selected by you, you could be forced to change the name of your company. It is for this reason that you verify from the Registrar of Companies that the name selected by you is not similar to any other registered company.

Statutory Registers

Every company in the UK has to maintain the following Statutory Registers:

• Register of Members
• Register of Directors and Secretaries
• Registry Fees

Principles 

One of the main reasons for the success of joint stock companies in the UK is that the owners of such companies are not personally liable to repay the debts of the company. What this implies is that the owners have limited liability, and they cannot be called upon to pay for the debts of the business or any claims against it.

The process of registering a company with the Companies House is known as Incorporation. The reason why most companies are being incorporated as with limited liability is that the liability risk involved is much lower as compared to other forms of companies.

All limited companies in the UK can easily be identified since they are mandated under the laws to add the word ‘Ltd’ as a suffix.

Taxes                      

Although the rules related to taxation of companies change frequently, one rule that has remained constant is that dividends, which refer to the distribution of profit to shareholders, are tax free.

Public Information

All limited liability companies are mandated under the state law to disclose details about their accounts in the register of companies. This transparency will benefit those who are about to deal with that particular company.