New companies

1. Is there more than one type of company?

There are four main types of company:

• Private company limited by shares - members' liability is limited to the amount unpaid on shares they hold. This includes those community interest companies (CICs) which are private companies limited by shares.
• Private company limited by guarantee - members' liability is limited to the amount they have agreed to contribute to the company's assets if it is wound up. This includes all RTM (Right to Manage) companies-, commonhold associations and those community interest companies which are companies limited by guarantee.
• Private unlimited company - there is no limit to the members' liability.
• Public limited company (PLC) - the company's shares may be offered for sale to the general public and members' liability is limited to the amount unpaid on shares held by them. This also includes community interest public limited companies. (that is, CICs which are PLCs). More about PLCs can be found in chapter 2.

2. Who can form a company?

The Companies Act generally allows one or more persons to form a company for any lawful purpose by subscribing to its memorandum of association. However, a public company or an unlimited company must have at least two subscribers. Information about companies formed by a single person can be found in chapter 3. (In law, 'person' includes individuals and companies).

3. How do I form a company?

Ready-made companies are available from company formation agents whose names and addresses appear in the Yellow Pages. If you incorporate a company yourself, you will need to send the following documents, together with the registration fee (see question 13 below) to the Registrar of Companies:

• A memorandum of association
• Articles of association (except where Table A is adopted without modification - see question 5)
• Form 10
• Form 12

Each of these documents is explained below.

4. What about community interest companies (CICs)?

When forming a CIC the following documents are required in addition to those listed in 3 above:

• a community interest statement
• an excluded company declaration

These documents must be in a form approved by the CICs Regulator. An approved format and further guidance can be found on the CICs website at www. cicregulator.gov.uk.

5. What is a memorandum of association?

This document sets out:

• the company's name,
• where the registered office of the company is situated (in England, Wales or Scotland); and
• what it will do (its objects). The object of a company may simply be to carry on business as a general commercial company.

Other clauses to be included in the memorandum depend on the type of company being incorporated. The form of memorandum for each type of company is set out in a set of tables called The Companies (Tables A to F) Regulations, 1985. (In this booklet we have called them 'the Tables'.) These tables do not apply to RTM companies or commonhold associations. The memorandum and articles for these types of companies are set out in:

• For RTM companies: ‘The RTM Companies (Memorandum and Articles of Association (England) Regulations 2003’ or ‘The RTM Companies (Memorandum and Articles of Association (Wales) Regulations 2004’
• For commonhold associations: ‘The Commonhold Regulations 2004’.

The company's memorandum delivered to the Registrar must be signed by each subscriber in front of a witness who must attest the signature.

6. What are articles of association?

This document sets out the rules for the running of the company's internal affairs. Model articles are provided in the Tables mentioned above.

A company may adopt the whole of Table A as its articles or any part of it.

A company limited by shares which has adopted the whole of Table A without modification does not need to deliver a copy for registration. However, you must attach a letter to your application saying this. CICs cannot take advantage of Table A to avoid registering articles.

In addition, the articles for community interest companies must comply with the requirements of the Community Interest Company Regulations 2005. Sample CIC memoranda and articles can be found on the CICs website at www.cicregulator.gov.uk.

The company's articles delivered to the Registrar must be signed by each subscriber in front of a witness who must attest the signature.

7. What is Form 10?

Form 10 gives details of the first director(s), secretary and the intended address of the registered office. As well as their names and addresses, the company's directors must give their date of birth, occupation and details of other directorships they have held within the last five years. Each officer appointed and each subscriber (or their agent) must sign and date the form.

8. What is a registered office?

It is the address of a company to which Companies House letters and reminders will be sent. The registered office can be anywhere in England and Wales (or Scotland if your company is registered there). The registered office must always be an effective address for delivering documents to the company, and to avoid delays it is important that all correspondence sent to this address is dealt with promptly. If a company changes its registered office address after incorporation, the new address must be notified to Companies House on Form 287.

• one director - but the company's articles of association may require more than one (See Question 6 );
• one secretary - formal qualifications are not required. A company's sole director cannot also be the company secretary.

A public company must have at least:

• two directors;
• one secretary - formally qualified, see chapter 2.

All company officers have wide responsibilities in law, but the key requirements are contained in our booklet, 'Directors and Secretaries Guide'.

After incorporation, you must tell Companies House about:

• the appointment of a new officer - use Form 288a;
• an officer's resignation from the company - use Form 288b;
• changes in an officer's name or address or any of the other details originally registered on Form 10 - use Form 288c.

10. Can anyone be a company director?

In general terms, yes, but there are some rules. You can't be a company director if:

• you are an undischarged bankrupt or disqualified by a court from holding a directorship, unless given leave to act in respect of a particular company or companies;
• in the case of PLCs or their subsidiaries, you are over 70 years of age or reach 70 years of age while in office, unless you are appointed or re-appointed by resolution of the company in general meeting of which special notice has been given.

There is no minimum age limit in the Companies Act for a director to be appointed in England and Wales. However, he or she must be able to consent to their own appointment. You should seek legal advice if you intend to have a very young person as a director of your company.

In Scotland the Registrar will not register for any company the appointment of a director under the age of 16 years old. A child below that age does not have the legal capacity to accept a directorship - Age of Legal Capacity (Scotland) Act 1991. If you need more information, contact Companies House, Edinburgh.

Some people not of British nationality are restricted as to what work they may do while in this country. If you need more information about whether such a person can become a director of a UK-registered company, contact:

Home Office Immigration and Nationality Department
Lunar House
Wellesley Road
Croydon
CR9 2BY (Tel: 0870 606 7766)

11. What is a Form 12?

Form 12 is a statutory declaration of compliance with all the legal requirements relating to the incorporation of a company. It must be signed by a solicitor who is forming the company, or by one of the people named as a director or company secretary on Form 10. It must be signed in the presence of a commissioner for oaths, a notary public, a justice of the peace or a solicitor.

To be able to use the ‘Software Filing’ service for company incorporations you must have suitable software.

Initially it will not be possible to register community interest companies electronically but this service should be available in the future.

If you would like to know more about the electronic service click here.

15. Where can I obtain forms to incorporate a company?

Forms 10 and 12 are available free of charge from Companies House but we cannot provide a memorandum or articles of association. Specimens of these documents can be obtained from legal stationers, accountants, solicitors or company formation agents who can also supply Forms 10 and 12. Names and addresses are available in business phone books.

Community interest statements and excluded company declarations (only relevant for community interest companies) can be obtained from the CICs website at www.cicregulator.gov.uk.

16. Can I deal direct with Companies House to form my company?

Yes. However, while our staff will be happy to give you guidance on general matters (such as filling in forms or advice on company names), they cannot advise you about the content of the memorandum and articles, or if an incorporated company is the best vehicle for your business.

If you are unsure about any aspect of forming a company, please seek professional advice from your solicitor, accountant or company formation agent.

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CHAPTER 3
Single member companies

1. What is a single member company?

A single member company is a private company, limited by shares or by guarantee, which is incorporated with one member, or whose membership is reduced to one person.

2. Can a single member run the company?

No. The company must still have at least one director and a secretary who cannot also be the sole director.

3. How can a single member hold general meetings?

Unless the company's articles of association specify anything to the contrary, a single member - present in person or by proxy - constitutes a quorum. If such a meeting is held, it must be recorded in the minutes.

If a single member takes a decision, except by written resolution, then the decision must be given to the company in writing.

4. How should a company record an unwritten contract with a sole member?

If the company enters into an unwritten contract with the sole member who is also a director of the company (and the contract is not in the ordinary course of the company's business), the company must ensure that the terms of the contract are set out in a memorandum or are recorded in the minutes of the next directors' meeting.

5. What about the register of members?

A company's register of members must accurately record its members. If a company is incorporated with one member, then the register must reflect this. If the company originally had more than one member and the membership reduces, then the register must show when this happened. Similarly, the appropriate entries must be made in the register of members if the number of members later increases.


CHAPTER 5
Publication of company name and details to be shown on company stationery

Under the Companies Act 1985 your company must state its name (as it appears in its memorandum of association) in certain places and on its business stationery. Your company must also give certain information on all its business letters and order forms.

1. Where must the company name be displayed?

Every company must paint or affix its name on the outside of every office or place in which its business is carried on - even if it is a director's home. The name must be kept painted or affixed and it must be both conspicuous and legible.

2. On which documents must the company name be shown?

The company must state its name, in legible lettering, on the following:

• all the company's business letters;
• all its notices and other official publications;
• all bills of exchange, promissory notes, endorsements, cheques and orders for money or goods purporting to besigned by, or on behalf of, the company;
• all its bills of parcels, invoices, receipts and letters of credit.

3. Must the company show any other details?

Yes. On all its business letters and order forms the company must show in legible lettering:

• Its place of registration and its registered number. The place of registration must be one of the following, as appropriate:

• 
  
• The address of the registered office. If a business letter or order form mentions more than one address, it is recommended that you state which is the registered office address.

4. Must directors' names be shown?

A company does not have to state the directors' names on its business letters but, if it chooses to do so it must state the names of all its directors. In other words a company cannot be selective about which directors' names it shows - it must show all of them or none of them.

5. Must anything else be shown?

Certain categories of company must also state the following additional information on their business letters and order forms:

• For an investment company (as defined by section 266 of the Companies Act 1985), that it is such a company.
• For a company exempt from using the word 'limited' in its name, the fact that it is a limited company.

For a company with share capital, it is not necessary to state the share capital on stationery but, if the company chooses to do so, it must state its paid-up share capital, not its authorised capital.

6. Are there special rules for charitable companies?

Under section 68 of the Charities Act 1993, a charitable company whose name does not include the word 'charity' or 'charitable' must state the fact that it is a charity on all the documents listed under question 2, in all bills it sends and on any conveyances it executes.

Section 68 does not require a charitable company to include the word 'charity' or 'charitable' in its name.

The Charities Act 1993 does not apply to charitable companies registered in Scotland but the same rule applies to Scottish companies under section 112(6) of the Companies Act 1989.

7. Do the rules apply to oversea companies?

A company incorporated outside Great Britain which opens a branch or place of business in Great Britain must be registered and must give similar details to those stated in this chapter. Full details are listed in our booklet, 'Oversea Companies'.


CHAPTER 6
The new company - looking forward

1. What information does Companies House require?

Company directors have a personal responsibility for making information about the capital structure, management and activities of their companies available both to the members of the company and to the general public.

For companies with limited liability, this will include accounts. If your company is unlimited, accounts must be delivered to the Registrar if:

• it is a subsidiary undertaking or parent of a limited company; or
• it has been a banking or insurance company or operated a trading stamp scheme during the period covered by the accounts.

2. What period should the accounts cover?

A company's first accounts must start on the day of incorporation. The first financial year must end on the 'accounting reference date' or a date up to seven days either side of this date (see question 3). Subsequent accounts start on the day following the year-end date of the previous accounts. They end on the next 'accounting reference date' or a date up to seven days either side.

3. How is the accounting reference date set?

The accounting reference date is the date in each year to which accounts will be drawn up. The date depends on the date of incorporation as it is the last day of the month in which the anniversary of incorporation falls. For example, if your company is incorporated on 2 July this year, the accounting reference date will be 31 July, and its first financial year must end on 31 July next year (or within seven days of that date).

4. Can the accounting reference date be changed?

Yes. You may change it by sending Form 225 to the Registrar. You must do this during the accounting period affected by the change or during the period allowed for delivering the associated accounts to us. For more information, see our booklet, 'Accounts & Accounting Reference Dates'.

5. How long do I have to deliver accounts?

The first accounts of a private company must be delivered:

• within 10 months of the end of the accounting reference period; or
• if the accounting reference period is more than 12 months, within 22 months of the date of incorporation, or three months from the end of the accounting reference period, whichever is longer.

The first accounts of a public company (PLC) must be delivered:

• within seven months of the end of the accounting reference period; or
• if the accounting reference period is more than 12 months, within 19 months of the date of incorporation, or three months from the end of the accounting reference period, whichever is longer.

6. What else must I tell Companies House?

Here are some of the important things that you must tell us about - using, in most cases, a special form we provide, and within the time limits stated.

• Changes of director(s) and secretary, within 14 days. For:
  
  appointments - use Form 288a
  resignations - use Form 288b
  change of personal details - use Form 288c
• Details of new shares being allotted, within one month. Use Form 88(2). See our booklet, 'Share Capital and Prospectuses' for more information.
• Any special or extraordinary resolutions and certain types of ordinary resolution, within 15 days of them being passed by the company. There is no special form but we need to receive a copy of the resolution. More information about company resolutions is available in our booklet, 'Resolutions'.
• When a resolution alters the memorandum or articles of association of a company, a copy of the amended document must also be sent in at the same time as the resolution.
• Details of any mortgage or charge created by the company, within 21 days. See our booklet, 'Company Charges and Mortgages' or for Scottish companies, 'Company Charges (Scotland)'.
• A change of registered office, within 14 days. Use Form 287. The change becomes legally effective only when we have registered the form.

Every company must deliver an annual return to Companies House at least once every 12 months. It has 28 days from the date to which the return is made up to do this.

To help you meet this filing requirement, we send a pre-printed 'shuttle' form to your registered office a few weeks before the anniversary of incorporation. This will show the information that you have already given us.

All you have to do is:

• check that the details are still correct;
• amend any that are not; and
• send the form back, signed and dated, within 28 days of the date of the return which is shown on the front of the form.

There isan annual document-processing fee of £30 (or £15 for users of our Software Filing or WebFiling services), which must be sent to us with the annual return.

Our staff in Cardiff and Edinburgh will be able to advise you on matters generally, but when you start a company it is important to get things right. So that you don't make what could turn out to be costly mistakes, it may be sensible to consult a solicitor, a company formation agent, a chartered secretary or an accountant as appropriate. Addresses will usually be found in the Yellow Pages.

For enquiries on community interest companies, please visit www.cicregulator.gov.uk

2. How do I send information to the Registrar?

You may deliver documents to the Registrar by hand (personally or by courier), including outside office hours, bank holidays and weekends to Cardiff, London and Edinburgh – see the back cover for addresses.

You may also send documents by post, bythe Document Exchange service (DX) or by legal Post (LP) in Scotland. If you send documents please address them to:

From Companies House website 19.1.07