Guiding
Tips
Setting
up the company
Compliance with
company regulations
Appointment
of directors and secretaries
Records and documentation
Banking and VAT administration
Setting
up the company
What
is the minimum amount needed for investment in a company?
The
Companies House has set a minimum level of £50,000
to be the Authorised Share Capital of a public limited company
(plc). The company may however issue any number of shares
up to the total authorised value of shares until further
required. A private limited company may initiate with a
lower share capital but should be sufficient to fund the
initial and foreseeable projects or asset acquisitions.
Can
anyone apply for a share in a company?
Yes,
anyone can openly apply to the company for shares. The company
is obligated to issue the shares either through advertisements
or through a prospectus. Anyone from the general public
may apply against the advertisement and the company is responsible
to ensure that no prospective investor is sidelined.
How
do I choose a company name?
The
company that you choose should be in congruence with the
requirements of the concerned legislation, i.e. Companies
Act and Business Names Act. Furthermore, the proposed name
should be available for use, which can be found out by browsing
through the Companies Index, available at Companies House.
Does
my company require a registered office?
Yes,
all companies are required to have a registered office in
England & Wales or Scotland. Companies House requires
each company to identify its proposed location and complete
address of its office, which will be used for correspondence
between the House and your company and all other organisations,
individuals and government institutions to which the Companies
House may supply your address. Any change in the registered
office address should be notified to Companies House as
early as possible to avoid inconvenience from all sides.
Are
there any registration forms that I need to fill before
I start my business?
No,
you can just use the electronic company formation service
to fill in your company details, which will be sent to Companies
House immediately. In addition, you will be appointed as
the first director of the company, which will allow to start
operations immediately.
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Compliance
with company regulations
What
should be the contents of a company letterhead?
A
company letter and other stationery should contain the following
information:
-
The
company's official name, as registered with Companies
House
-
The
company's registered office address
-
The
registration number allotted by Companies House
-
The
VAT registration number (where applicable)
-
The
place of registration, England & Wales or Scotland
What
should the company do if another business is being operated
under its name?
Where
there is a dispute over the registered name of the company
with another company, the matter must be settled in the
court of law, as required by the Companies Act. The Registrar
of Companies does not handle such matters and any conflicts
must be resolved legally.
Are
there any restrictions on the selection of a company name?
The
name that a company selects for trade purposes must be in
conformation with the requirements of the relevant legislation,
that is the Companies Act and Business Names Act, and the
Companies Names Index. The Acts set out the regulations
for proposing a name, while the Index contains the list
of registered names of companies throughout the United Kingdom.
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Appointment
of directors and secretaries
When
does a company require a director and/or secretary to be
appointed?
A
director is appointed by shareholders of the company or
is a self-appointed person to manage the affairs of the
company. The company director may be an individual person
to lead the company or be a member of the Board of Directors,
who are appointed by the shareholders.
A
secretary is appointed as an administrator of the company,
subordinate to and appointed by the director or board of
directors. The appointed secretary may also hold the seat
of a director of the company, but cannot be a sole director
and secretary at the same time.
Who
is eligible to take over the role of the director and the
secretary?
The
candidate for the directorship of a company must fulfil
three conditions to qualify for the position.
-
The candidate must be an adult, sound of mind and experienced
to perform the required tasks;
-
The
candidate must not be disqualified by a court for holding
any position in the future, except where a leave has been
granted in specific circumstances; and
-
The
candidate must not be an undischarged bankrupt and restricted
by a court order from holding the position, except where
leave has been granted.
The
prospective candidate for the position of a company secretary
should be at least one of the following to qualify.
-
Be
a member of a professional accountancy body of the United
Kingdom; or
-
Held
the office of secretary or deputy secretary previously,
either within the organisation or in another company;
or
-
Be
a barrister, advocate or solicitor practicing in the United
Kingdom; or
-
The
director(s) believe that the candidate has sound knowledge
and experience for the proposed functions, and/or is a
member of another professional body that the directors
find acceptable for the position.
Who
is responsible to ensure compliance with the company regulations?
Companies
House requires directors to ensure that statutory documents
are dispatched to the Registrar according to the dates announced
periodically. These documents include
-
Annual
accounts and returns;
-
Notices
of any change in the company directors and secretaries
or any modifications in the records of existing directors
and secretaries; and
-
Notice
of a change to the address of the registered office.
If
a director fails to supply the above documentation within
the time limit, s/he may be prosecuted, as it is a criminal
offence to delay or avoid the filing of records. If the
Registrar believes that the company is no longer carrying
on its business, the name could be struck off the register
and dissolved.
A
company secretary has no specific duties as far as the legislation
is concerned but is required to administer the company and
maintain appropriate documentation of all its proceedings.
These may include
-
Ensuring
prompt filing of all statutory forms and documents
-
Issuing
notices for meetings to auditors and shareholders
-
Delivering
copies of the company meetings and resolutions passed
and agreements made
-
Supplying
a copy of the annual financial statements to all shareholders,
debenture holders and all eligible persons
-
Maintaining
a record of all minutes during meetings of the board of
directors and general meetings
-
Allowing
accessibility to company records for inspection by eligible
persons
The
secretary is also responsible for the custody and use of
the company seal, although companies are no longer required
to use an official seal.
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Records
and documentation
What
are the essential documents that a company is required to
maintain?
Companies
are required to produce annual financial statements and
returns and submit them to Companies House within the stipulated
time frame. In addition, the company secretary is required
to submit copies of all registers maintained with the company.
What
are the contents of the annual accounts or financial statements?
A
limited company is required to file a set of financial statements
or accounts annually to Companies House. The set of documents
includes
-
A
profit and loss account (income statement) or a statement
of income and expenditure;
-
A
balance sheet signed by the director;
-
An
auditors' report on the company's performance;
-
A
directors' report, signed by the company director or secretary;
-
Notes
to the financial statements; and
-
Group
accounts (where appropriate)
Are
all companies required to submit their annual accounts?
All
limited companies and public limited companies are required
to submit their accounts to the registrar of companies.
Unlimited companies are not required to file their statements
provided they have been part of a group of companies, or
are a bank or insurance company.
What
are annual returns?
An
annual return is a précis of the information about
the company and its directors, secretaries, registered office
address, shareholders and the share capital. A company is
required to fill Form 363a with the following information
in a comprehensive manner.
-
The
company's name
-
The
company's registration number
-
The
status of the company, i.e. public or private
-
The
registered office address of the company
-
The
address or location where company registers are kept,
if different from the registered office
-
The
main or principal business activity of the company
-
The
name and address of the company secretaries
-
The
name, residential address, date of birth, nationality
and the business occupation of all directors of the company
-
The
date of drawing up the annual return
-
The
nominal value of the total issued share capital of the
company
-
The
names and addresses of the shareholders, the number of
shares held and the type held by each shareholder
When
is an annual return due at Companies House?
Companies
Issue sends you the Form 363a (shuttle and regular) two
weeks prior to the date you are required to file it, i.e.
the made-up date. This will be based on the made-up date,
which is usually the anniversary of
The
annual return must be filed at Companies House within 28
days of the made-up date as mentioned on the form.
What
information is required regarding shareholders and share
capital?
The
shuttle return form contains pre-printed information relevant
to the company's share capital. If there has been a change
in the structure during the financial year, the information
must be written on the form where required to update the
Companies Register. The information should mention:
-
The
name and the class of each type of share issued or authorised,
e.g. ordinary shares, preference shares etc.
-
The
total number of shares issued to the shareholders as at
the made-up date of the annual return
-
The
total nominal or face value (excluding any calculations
of premiums or discounts on each share issued) of the
issued shares of the class as at the made-up date of the
annual return
Where
the information in Form 363a is incorrect, one or more other
forms may be required to be filled and sent over to Companies
House.
What
is the Accounting Reference Date (ARD)?
The
ARD is the financial year-end, according to which all financial
statements are prepared. If the company's date of closure
were moved to another date, Companies House must be informed
promptly to avoid any unfavourable incident for the company.
The accounts must be submitted before the deadline, which
is set based on the company's ARD.
Can
the filing dates be extended?
The
filing or deliver dates of the accounts can be extended
in special circumstances where the reason has been defined
and approved by Companies House. For this, Form 244 must
be filled and delivered before the normal filing date and
must be done individually for each financial year in question.
An
application can also be submitted to the Secretary of State
for Trade and Industry for an extension in the delivery
date, where some unforeseen circumstances may have taken
place such as those that were beyond the control of the
company's personnel and the auditors.
Where
the deadlines have been breached, the company is automatically
charged for a civil penalty for late filing. The amount
fined, however depends on whether the company is private
or public. Failure to deliver in specified period is also
a criminal offence for which the directors of the company
may be prosecuted.
Does
a dormant company have any obligations for filing any documents?
A
dormant company is required to submit its set of accounts
and returns annually to Companies House, despite the fact
that it is not engaged in any form of business activity.
The dormant company is given leave from preparing a full-length
set of accounts and may present brief but acceptable financial
statements, that are not necessarily audited.
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Banking
and VAT administration
What
kind of documentation will be required to open a business
bank account?
To
open an account with a reputed banking institution, the
company should keep its incorporation certificate handy,
also the Memorandum of Association, and the Articles of
Association. These may be required at the time of application
because the bank will ensure that the agreement covers an
overdraft facility for the company at acceptable rates.
Do
all banks provide overdraft or lending facilities?
Almost
all banks provide overdraft and short-term lending facilities
to their clients. The matter must be agreed at the time
of framing the contract between the company and the bank.
Once good business is established between the two parties,
further arrangements for short and long-terms financing
may take place.
When
should a company register for Value Added Tax?
A
company should register with HM Customs and Excise for Value
Added Tax (VAT) once its annual sales revenue of normal
standard goods reach the £54,000 benchmark. The HMCE
requires a company to register for VAT if it expects the
total sales revenue for the year including the proceeding
month should equate or go beyond the threshold. Companies
may voluntarily register for VAT if they wish to gain relief
on input tax on the products and/or services they purchase
from VAT registered suppliers.
When
is VAT due?
Value
Added Tax is payable to HMCE in quarterly instalments after
calculating the net VAT payable. The net VAT is calculated
by deducting the input tax from the output tax of all products
and/or services sold. The instalments are due by the 10th
of April, July, October and January for the revenue of the
preceding 3-month period.
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