Setting up a Company
Setting up a Company
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Setting up a Company
The UK has an open, transparent and business-friendly system to encourage the formation of new businesses. There are more than 2 million registered companies in the UK, with over 330,000 new registrations each year.
With a few exceptions, the UK does not discriminate between nationals and foreign individuals in the formation and operation of private companies.
No permission is required to establish a business presence in the UK, although there are regulations on the use of business names and certain business sectors, which may require licences or authorisation (such as finance, defence and oil exploration).
Companies House is the key government organisation that co-ordinates the administration of businesses in the UK.
Please note that information provided is for guideline purposes only. For further information please contact a member of the IPTU Team.
Companies House is the key government organisation that co-ordinates the administration of businesses in the UK. It also has a key role in providing information about British companies.
Before a business can set up as a limited company (or become "incorporated"), it must be registered with Companies House. All limited companies in the UK are registered at Companies House, an Executive Agency of the Department of Trade and Industry.
The main functions of Companies House are to:
- Incorporate and dissolve limited companies;
- Examine and store company information delivered under the Companies Act and related legislation;
- Make this information available to the public.
For further information, please go to the Companies House Website
Foreign Direct Investment
The UK is the most favoured inward investment location in Europe, attracting about a quarter of all direct investment in the EU. Foreign direct investment (FDI) is generally recognised as one of the key factors in economic growth and wealth.
The UK government believes that investment flows benefit both developed and developing countries, creating opportunities for investors and helping developing countries to achieve sustainable development.
Companies establishing British subsidiaries generally encounter no special nationality requirements on directors or shareholders, although at least one director of any company registered in the UK must be ordinarily resident in the UK.
Once established in the UK, foreign-owned companies are treated no differently from UK firms. Within the EU, the British Government is a strong defender of the rights of any British registered company, irrespective of its nationality of ownership.
The UK has a very strong track record in attracting foreign investment. In 2005 the country attracted the highest amount of foreign investment globally, receiving US$219 billion of FDI inflows, representing 24.4 per cent of all global FDI inflows (the UK accounted for 49 per cent of all FDI into European Union countries and had the highest level of FDI ever recorded in a European country).
Type of Companies
The fact that an overseas company is carrying on business in Great Britain does not automatically mean that the company has to register, but the majority of foreign investors will establish a UK registered company when setting up in the UK.
There are four different types of UK registered 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-, common hold 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).
For further information, please read the read the "Company Formation guide" from the Companies House Website
Foreign Businesses Presence
Instead of registering a UK company, foreign businesses can establish a presence in the UK through the following:
A part of an overseas limited company organised to conduct business through local representatives in the UK.
It gives a physical or visible indication that a company may be contacted there. An overseas company also has to register if it regularly conducts business from a particular location in the UK, even if there is no physical sign of the company's connection with it.
Individuals, including overseas investors, can set up as a partnership in the UK.
- One or more persons called "general partners" who are liable for all debts and obligations of the firm
- One or more persons called "limited partners" who contribute a sum or sums of money as capital, or property valued at a stated amount
- Limited liability partnerships (LLP)
An alternative corporate business structure providing the benefits of limited liability but allowing its members the flexibility of organising their internal structure and tax arrangements as a traditional partnership.
An overseas company can form a base in the UK by joining with a British company.
- European public limited company
European legislation allows overseas companies to establish a European public limited company (also known as a "Societas Europaea" or "SE") in the UK. An SE can be registered in any country within the European Economic Area although the registered office and head office must be in the same country.
For further information, please read "Forming a Company" by UK Trade and Investment
Incorporation of a Company
1. The name:
The first step in the formation of a company is to select its name. The name is the symbol of a personal existence. You'll need to register your name and other details with Companies House.
The name should not be offensive, the same or similar as a company that already exists and shouldn't include any sensitive words or expressions, unless you have obtained permission to use them.
If your chosen name is too like another name, an objection could be made within the 12 months following the incorporation of your company and you could be directed by the Secretary of State to change the company's name.
For further information, please read, "Choose the right name for your business" from Business Link
2. Memorandum of Association:
An important step in the formation of a company is to prepare a document called Memorandum of Association.
It is the charter of the company that contains the basic conditions on which the company is incorporated (the name, the State in which the registered office is to be situated, the main objects of the company to be pursued, the liability of the members and the authorized capital).
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.
3. Articles of Association:
Articles of Association of the company are the regulations that govern the internal management of affairs of the company and the conduct of its business. The Articles are subordinate to the Memorandum of Association.
For further information: Memorandum and Articles of Association, from UK Corporator Website
4. Registration of company and issue of capital:
To set up a company in the UK, you will need to send several documents and completed forms to Companies House, or, in Northern Ireland, to the Companies Registry for Northern Ireland:
- A Memorandum of Association, giving details of the company's name, location and what it will do
- Articles of Association, describing how the company will be run, the rights of the shareholders and the powers of the company's directors
- Form 10 (Statement of the First Directors, Secretary and Registered Office) giving details of the company's registered office and the names and addresses of its directors and company secretary. The equivalent form in Northern Ireland is Form 21
- Form 12 (Declaration of Compliance with the Requirements of the Companies Act), stating that the company meets all the legal requirements of incorporation. The equivalent form in Northern Ireland is Form 23
- Registration Fee
Download the Forms the Companies House Website
5. Certificate of incorporation:
Upon compliance with all requirements, the Registrar will register the company and issue a Certificate of Incorporation of company. The company comes into existence when the Registrar of Companies issues a certificate of incorporation.
For further information, please read "Set up and register a limited company" from Business Link Website
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