UK Company Formation - an Overview
The UK market offers multiple benefits for entrepreneurs and business owners. Opening your company in the UK is now much easier, thanks to Actolegal.
In response to the UK government's white paper, the Companies Act, 2006, was passed. In addition to this Act, there are many codes that govern businesses, SMEs, and enterprises in the UK. The UK corporate governance code and other Acts that govern corporations are some of the well-known legislation.
The Companies Registry of UK is the main regulating agency or authority for the creation of UK companies (companies house). This is one of the main organisations in charge of regulating business practices in the UK. In addition, there are various types of authorities, such as the FCA.
Benefits of Incorporating a Company in the UK
Very easy to incorporate : The regulatory and legal requirements for starting a business in the United Kingdom have become much easier in the past few years. Whether you are registering a new company or filing your income tax return online, the barriers that existed earlier are getting lower steadily. The World Bank found that it takes 13 days to set up a business in the UK, compared to the European average of 32 days. It ranks the UK first in Europe and sixth in the world to operate a business.
Government support: The British government provides a number of financial schemes that offer sizable tax benefits to the owners and employees of companies. These schemes are also extended to smart investors. Upon selling a company, you can claim entrepreneurs relief up to 10 million pounds. Investors can also claim tax credits up to £150,000 against their investments in any given year.
Worlds largest product market: The OECD noted that the UK is second in the world for Product Market Regulation and is only behind Australia, has the least restrictions to entrepreneurship in the world and has the third least barriers to investment and trade in the world.
Efficient communication system: The United Kingdom has an extremely efficient communication system and has the most extensive broadband market among the G7 countries and one of the strongest ICT infrastructures in the world.
Documents and Information Required for Company Incorporation in the UK
For starting up a business in the United Kingdom, we will require the following documents and information:
Memorandum of Association (MoA):
A short document confirming the owners intention to form the company and to become members of that company on incorporation.
Articles of Association (AoA):
The company’s principal constitutional document, which contains in detail all the administrative provisions of the company’s operations that are agreed by its members. It sets out how the important decisions are taken by the members and directors, as well as various matters connected with the shares, general meetings of the members, appointment and powers of directors, board resolutions and notices, helping to ensure that the company’s business runs as smoothly and efficiently as possible.
A UK private limited company can choose any name provided that: it is distinctive: it cannot be identical to another name, differ from another name on the company index: it doesn’t contain a sensitive word or expression and is not offensive.
Your company should have a physical address in the UK. This is where official communications will be sent, such as correspondence from companies house, HM revenue, and customs department. This address will be publicly available on the online register and will be the location where the public is able to inspect the statutory registers of the company, unless the company adopts a Single Alternative Inspection Location (SAIL). The address should be displayed on all company stationery, including emails and websites. We can help you establish a registered UK office address – learn more.
The First Officers consist of the following.
A private limited company must have at least one director who is a living individual, at least 16 years of age and not disqualified from being a director. It is advisable to have at least two directors to ensure continuity if one of them resigns or is unable to conduct the duties.
A private limited company does not have to mandatorily appoint a Company Secretary unless the same is specifically mentioned in the articles of the company. A company secretary can be an individual or an organisation.
Statement of Capital
This statement provides the details of the shares of the company and their valuation. There can be numerous classes of shares with different rights such as voting rights, dividend rights, capital rights and redemption rights.
Persons with Significant Control
Any person with significant control must be registered on the incorporation of the company. The purpose of the same is to improve corporate trust and transparency by making it clear who ultimately controls the company. A person with significant control is an individual or legal entity who meets one or more conditions relating to share ownership, voting rights, appointment of directors or exercises control of the company.
Company Registration for Non-UK Residents
The registration procedure for non-UK residents is very much similar as for residents living in the UK. There are no restrictions on foreigners being a director, shareholder, or secretary. You even need not have to live in the UK for starting a company. But your company must be registered with Companies House in England and Wales, Scotland or Northern Ireland (depending on the location of the company).
Requirements for Registering a UK Limited Company:
Company Name: The name of your company should be unique and should not contain any prohibited words.
Director: Only one director is required for the company formation but there is no limit to the number of directors you can appoint. The age of every director should be 16+
Shareholder: Only one shareholder is required but there is no limit to the number of shareholders you can appoint.
Registered Address: This address of the company must mandatorily be in the UK and will appear on the public register.
Directors Service Address: Each director, secretary and PSC must provide a service address for Companies House. This address can be located anywhere in the world but it will be on the public record.
What Aspects Are Taken into Account When a UK Corporation Is Formed?
When forming a UK corporation, the following elements must be taken into account:
Category of Business : The applicant must first review every category of business that is present in the UK. The sort of business that will be used for company formation must be taken into account during the formation procedure. The applicant may take into account a variety of business kinds when completing the UK company formation process:
Location-friendly Name: Sometimes, based on the new geography you are entering, it might prove necessary/useful to change to a name that is more friendly and acceptable there.
International business or UK business: The applicant for a UK company formation must also decide whether the company will be set up as an international or UK corporation. If the corporation is governed by domestic law, then UK-specific legislation would apply to the company.
Types of Business Structure (UK Company Formation)
The applicant must first choose the best business structure for establishing the company as in the UK. In the UK, the following company structure types are available:
Lone Trader: As the name suggests, a sole trader is an individual who runs their own firm. A lone proprietor has unrestricted liabilities. As a result, the applicant before beginning the process of registering as a sole trader, should examine the quantity of his own liability.
Partnership: A partnership firm is when two or more persons initiate a company and decide to divide the company's profits. The assets and liabilities of a partnership-type business are divided among the partners.
Limited Liability Partnerships: are legal entities in which the maximum liability of each partner is limited to the capital they have contributed to the partnership.
An Unlimited Company: It is a business with or without share capital that resembles a limited corporation. There is no cap on the responsibility of its shareholders or members. As an outcome, they are together and are responsible for the company's debts.
Limited Company—A limited company has limited liability and is widely incorporated in the UK. In case of bankruptcy the personal assets cannot be seized.
A Public Company: It is a type of company whose ownership is disseminated by the public through shares that are exchanged publicly. These businesses are required by law to make the public aware of the pertinent information.
Private Company: A privately owned company falls under this category. Even though these businesses are permitted to issue shares, they are not listed in the stock exchange.
Eligibility Requirements for Forming a UK Company
The following qualifying regulations must be fulfilled in arrangement to form a UK company:
- Minimum share capital required
- Name of the business
- Registration of the Directors' Number
Procedure for UK Company Formation
Creation of the business
This is the first step, Just start your business and take all the needed steps. The appointment of additional essential management personnel, such as the company secretary, is also crucial. In the UK, every director must be older than 16 years old. The directors' service address must be correctly provided in the material.
The shareholders and guarantors (PSC) is accounted:
There must be at least one shareholder with the authority to manage the company's affairs for the company to be registered. The corporation must have shareholders in order to be formed. Following this, the applicant must identify the executives (shareholders or directors) who have considerable control over the business. The PSC registration is one such register.
Create Legal Documents for Running the Company:
In order to register a firm, the applicant must now draft specific legal documents, such as the Memorandum of Association (MOA) and Articles of Association (AOA).The company's organisational structure is governed by the AOA. the company must also have a registered address in the UK.
After completing the aforementioned steps, you must register the company and submit a SIC code. The activities that the company performs will be indicated by this code. Subsequently you must register with the company's house. The business must register with the corporate tax authorities in order to take into account taxes paid in the UK.