Company Formations
These notes assume that a decision to form a company has already been made
after obtaining the appropriate advice from your accountant.
Majors, Chartered Accountants, can form the company for you. Please call or
e-mail to arrange a free initial discussion.
The following subjects are amongst those which need to be considered
prior to incorporation:
THE MEMORANDUM OF ASSOCIATION
The Memorandum of Association forms part of the rules of the company
and contains five clauses:
1. The name of the company.
Please remember that
some names e.g. Royal, may not be used. Other words such as
"midwives" or "group" need permission from Companies House
as they may not be used in inappropriate situations. Majors, Chartered Accountants will
carry out a name search to ensure that no other company has
the same or a similar name. Remember that over four million companies
have been registered in the past and thus your first choice of name
may not be available.
2. The Registered Office.
Although an English or Welsh company will simply state
in its Memorandum that it is registered in England or Wales, Companies House will
not incorporate the company without registering an address for it.
This Registered Office does not need to be an "office", and could be someone's home.
It is the address to which any legal documentation may be delivered or sent. Post Office
Box Numbers or 'care of' addresses are insufficient. An English or Welsh company
must have its registered office in either England or Wales; a Scottish address is
not allowed.
We are sometimes willing for our own address to be used for the company's registered
office but we do make a small charge for this and for redirecting mail.
3. The company's objects
- companies are now normally formed with
a general Objects Clause in the Memorandum of Association that allows the
company to carry out any type of commercial operation. However, it is normal
also to specifically mention the type of industry in which the company will
be engaged e.g. house building, sheet metal working or publishing.
4. The Memorandum also states that the liability of its members (shareholders)
shall be limited.
5. The authorised share capital of the company.
This can be set at any figure. If the company subsequently needs to issue more
shares than it is authorised then it will need to amend the Memorandum. This
involves additional costs, so it makes sense to set the authorised share capital
at a realistic figure in the first place. We can give advice on the required
amount after discussing the background to the proposed company.
THE ARTICLES OF ASSOCIATION
The Articles of Association are effectively the internal rules of the company setting
out, for example, how meetings shall be conducted and how directors shall be elected by
the shareholders. It is likely that the company will adopt the model set of Articles of
Association from the latest Companies Act. It will then
modify these as appropriate. Some consideration needs to be given as to the
modifications necessary.
ADDITIONALLY
The proposed director(s) and secretary will have to sign forms consenting to
act as such. These forms are for filing at Companies House.
Under the Money Laundering Regulations, two forms of identification are
required for the person or company giving us the instructions.
These forms of identification must include addresses and names.
The basic cost of company formation is £120.
After receiving all of the documentation and information, company
formation takes approximately 10 working days.
URGENCY
Occasionally, a company is needed quickly. There are two solutions to
this potential problem.
If incorporation is urgent but the name is unimportant, a company can
be bought "off the shelf". The choice of name
will be restricted, but the name can be changed later. The basic cost
is the same at £120, but any subsequent change of name will incur
additional costs. The change of name can also take up to 10 working days.
If incorporation is urgent and it is also important that the company starts its life with the
chosen name, then a company can be formed within 24 hours (ignoring weekends
and Bank Holidays when Companies House is closed). The basic cost
is higher because of additional Government Duties, etc.
DOCUMENTATION RECEIVED ON COMPANY FORMATION
Once the company has been formed the following documentation is received:
a) Certificate of Incorporation - this is effectively the
company's birth certificate showing the name of the company and
the date of incorporation. It is issued by the Department of
Trade & Industry at Companies House.
b) Several copies of the Memorandum & Articles of Association
- these are the company's rules.
c) Various minutes of directors' meetings etc.
d) Register of Members, debenture holders, charges, directors
and secretaries - this book arrives totally blank and does need to
be completed following company formation - this work is normally
carried out by Majors, Chartered Accountants, if we have formed
the company. An additional charge for this and various registrations
is made of £60 plus VAT.
CONCLUSION
Please remember that company law is complex and wide ranging. These notes are no
more than a brief outline of the matters to be considered. There will be many
points of detail on which directors will need professional advice from their
accountants.
You should always obtain individual advice based on your own particular
circumstances. Why not take advantage of a free initial discussion?
© Majors, Chartered Accountants, 2001; Updated 24 November 2001; Reviewed 25 April 2002