The United Kingdom (“UK”) has long been recognised as an international business hub. Despite having a reputation of being a business-friendly state, the UK company incorporation process can be confusing at times. In this article, we look to share guidance on what the UK company incorporation process entails.
What You Will Learn:
2. Select Your Company Directors and a Company Secretary
3. Decide on the Company Shareholders / Guarantors
4. Identify People With Significant Control (“PSC”) Over Your Company
5. Prepare Documents Agreeing on How to Run Your Company
6. Obtain a Registered Office Address
7. Identify Your Company’s Standard Industrial Classification of Economic Activities (“SIC”) Code
1. Decide on a Company Name
Deciding upon a company must be done so with consideration made to the various company naming rules set by the UK government – luckily these rules are not extensive. In general, UK company names must conform to the following:
1. A company name cannot be the same as, and cannot be considered too similar to an existing UK company’s name or trademark
2. The name cannot be considered offensive
3. The name cannot suggest a connection with the UK government, unless prior approval has been granted
To facilitate this step of the UK company incorporation process, applicants can utilize the Companies House register to inspect the availability of their desired company name.
2. Select Your Company Directors and a Company Secretary
Upon deciding a company name, steps must be taken to select individuals who will undertake key positions within the company, specifically the company director(s) and company secretary.
Company Director
- UK companies must have at least 1 company director. These individuals are not subject to nationality or residency requirements
- This position is legally responsible for running the company and ensuring that the company accounts and reports are properly prepared
- Company directors must be over the age of 16 and cannot have been previously disqualified from the position of company director
- All company directors must provide a service address which will be publicly available. Company directors who wish to utilize a home address can ask the Companies House to remove this address from their register
Company Secretary
- The role of company secretary is not legally required for UK companies but can still be utilized
- Companies secretary primarily take on some of the company director’s responsibilities
- A company secretary cannot be:
3. Decide on the Company Shareholders / Guarantors
Companies who are limited by shares must decide on the initial shareholders and the particulars surrounding the type of shares they will issue. This information must be provided during the UK company registration process, specifically:
- The number of shares of each type the company has and their total value
- The names and addresses of all initial shareholders
- What rights each type of share gives each shareholder, which includes:
- What share of dividends the shareholder is entitled to receive
- Whether the shareholders can exchange their shares for monetary compensation
- Whether the shares allows shareholders to vote on certain company matters
- To the extent that shares grant voting rights, how many votes each share provides
Oftentimes, a company can be limited by guarantee whereby an individual/party recognised as the guarantor will promise an agreed amount of money to the company in the event that it cannot pay back its debts (“guaranteed amount”).
Companies that are limited by guarantee must have at least one guarantor and an agreed upon guarantee amount.
4. Identify People With Significant Control (“PSC”) Over Your Company
UK companies are required to maintain a registry of their beneficial owners and those who exert a large influence over the company. In other words, they must identify, and record the individuals who own, control, or have significant influence over the company. For completeness, the UK government considers any individual to own 25% or more of a company, to be a PSC.
During the incorporation process, a UK company must:
- Identify the PSCs of a company and confirm their information
- Record the details of the PSC on the company’s own PSC register within 14 days of identifying those individuals
- Provide this information to the Companies House’s central public register within a further 14 days
Any further changes to a company’s PSC must be disclosed to the Companies House within a further 14 days of any changes.
Furthermore, PSC rules will vary for Scotland incorporated companies. Parties who are contemplating incorporating a UK company in Scotland can refer to the UK governments relevant resources.
5. Prepare Documents Agreeing on How to Run Your Company
To facilitate the UK company incorporation process, all companies must produce a Memorandum of Association and an Articles of Association.
Memorandum of Association
- A legal statement signed by all of a company’s initial shareholders / guarantors and is their written confirmation of their intention and agreement to form the company
- A company conducting their UK company incorporation process online is not required to write out a Memorandum of Association as this document will be generated automatically through the UK government’s website
- A company cannot update their Memorandum of Association upon successful registration of their company
Articles of Association
- A legal statement outlining how a company has been agreed to be run. These rules are to be agreed upon by the company’s shareholders/guarantors, company directors and the company secretary (if a company has decided to maintain this position).
- The Companies House provides various templates that can be utilized when drafting this document
6. Obtain a Registered Office Address
All UK incorporated companies must maintain a registered office address where all official communications will be sent. This address must be obtained and ready for use before one begins their UK company incorporation process.
All registered office addresses must meet the following criteria:
- Must be a physical address in the UK
- Must be in the same country the company is registered in
- A P.O. Box can be utilised but must be accompanied with a physical address and postcode
Oftentimes, non-residents will utilize the services of an agent to obtain a registered office address. These services are permitted but one must ensure that the address obtained meets the above criteria or they face the possible risk of delaying the company incorporation process. Lastly, it is permitted to utilize a home address as a registered office address.
7. Identify Your Company’s Standard Industrial Classification of Economic Activities (“SIC”) Code
The Companies House uses SIC’s to help understand the nature and scope of business for UK companies. When setting up a company in the UK, a SIC code must be provided to the Companies House.
The Companies House has provided an online search engine to help applicants identify the SIC code relevant to their business.
8. Submit Your UK Company Registration Application
The Companies House is the UK’s official registrar of companies and is the government entity where all UK company incorporation applications should be sent to.
The Companies House allows for parties to submit their UK company registration application either online, by mail or also by using a registered agent to act on your behalf. Those who are considering completing this process by mail should download form IN01. In addition, while non-residents are not required to venture to the UK to complete this process (as it can be completed completely online), all methods of application will require the submission of the above mentioned information.
In the event that an application is rejected, the Companies House will return all application documents and request for adjustments to be made accordingly to rectify any identified errors or omissions of information.
Upon successful company registration, applicants will receive a Certificate of Incorporation from the COmpanies House that confirms the company has been legally formed.
9. Other Considerations
Upon successful UK company incorporation, the company directors must ensure that the company registers for UK corporation tax and as an employer with Her Majesty’s Revenue and Customs (“HMRC”).
In addition, several ongoing obligations must be met.
- Maintaining records for the following:
- Details of the company’s directors, shareholders and company secretary (if any)
- Results of any shareholder votes and resolutions
- Promises for the company to repay loans at a specified date and the recipient of the repayment
- Promises the company makes for indemnities
- Transactions when a party purchases shares of the company
- Loans or mortgages secured against the company’s assets
- Register of PSCs
- Financial and accounting information
Conclusion
UK company incorporation may seem complicated at first glance but it doesn’t have to be. The FastLane Group has extensive experience assisting SMEs in company incorporation in countries around the world. Please contact the FastLane Group for help!