A Limited Company, or incorporated company, is financed by a larger number of shareholders than the smaller business, such as sole traders or partnership businesses. Unlike the latter two, a company is a “legal entity”, i.e. recognised by the law as a company independent of its owners and/or directors, that may be sue and be sued in its own name. Furthermore, the “limited” status of the company is directed towards the shareholders who enjoy limited liability towards the company and its obligations.

A company must have at least two persons in the administration and management of the company. Both may be the directors of the company and one of them or another person may be appointed as the company secretary; a sole director may not be the secretary.

A company is required to submit the following to the Companies House to incorporate a new or existing company.

The Memorandum of Association

This document contains details related to

• The company’s name

• The address of the registered office of the company in the United Kingdom

• The objectives of the company that will be upheld during the life of the business

• A description or type of company that is being incorporated.

The Companies Regulations (Table A to F) 1985 contains the form of memorandum and articles of association required for each type of company. The memorandum must be signed by each initial subscriber to the company, attested by a witness to the process.

The Articles of Association

A comprehensive set of rules designed for the management of a company. Table A contains a model of the Articles of Association, which may be adopted completely or in part, by a company in setting out its internal policies.

Where the company has adopted Table A in full, it is not required to submit its Articles of Association. If modified, a copy must be delivered for registration. The articles delivered must be signed by each subscriber before a witness attesting the validation of the signatures.

Form 10

Contains information relevant to the founding director(s), the company secretary and the proposed address of the company’s registered office. Director(s) are required to provide details of their directorships during the recent five years, their occupation and their date of birth. Each officer appointed in the company and each subscriber to the share capital (or his/her agent) is required to sign the form and insert the date.

Form 12

This document requires the company to comply with the legalities pertaining to the incorporation of the company. it is a statutory declaration and must be signed by the solicitor appointed for the formation of the company or one of the directors or company secretary mentioned on Form 10. The form must be signed after Form 10 and in the presence of a commissioner for oaths, a notary public, a justice of peace or a solicitor.

Choosing a company name

In selecting an appropriate name for your company, you should consider the following points before making any propositions or submitting your application to the Companies House.

• The name must not be similar to any name on the companies register

• Use of certain words in a company name are not allowed

• Names that are likely to cause concern or offence are not allowed

In the event of a name being very similar to an existing one, an objection may be lodged with the Secretary of State within 12 months of registration. The Secretary may direct your company to change its name and ensure that it does not coincide with another existing company name.

Raising Capital

A company is required to have an "authorised" and "issued" share capital. The Companies House requires a company to have at least a quarter of the shares must have been paid up before it commences business. This value should be the nominal value of the shares grossed down or up for any share premium collected or any discounts offered on the share issue, respectively. For example:

Starting the business

A company must not commence its business activities until it has the relevant certificate issued in its name under section 117 Companies Act 1985. This certifies that the company has issued the required minimum share capital to the public. An application for the certificate must be made by completing Form 117, available with the Companies House. A charge of £20 is payable for the certificate. The certificate is posted or faxed to the registered office of the company; business may commence after receipt of the certificate and any borrowings that the company require to run the business.

Publicising your company

The provisions of the Companies Act 1985 requires all companies to prominently display its name, as approved by the Companies House, at locations within the companies vicinity and on all company stationery. The name should be accompanied with some information regarding your company on the stationery.

Company stationery includes all business letters, notices and official publications of the company, cheques and other promissory notes, invoices, orders etc. Other details required on stationery are the place of registration and the registration number, and the address of the registered office of the company.

Preparing accounts

The directors of a company are legally bound to report on the company’s performance for each financial year of the business. In doing do, they are to comment on the performance of the capital and debt, resulting in a profit or loss to the company and how the assets are being managed to improve efficiency and productivity thus being capable of increasing shareholder wealth. The information should also be made available to the general public, ensuring that a prospective investor has enough detail to decide on his/her venture in the company.

The accounts of a company should commence on the date of incorporation and maintained according to a schedule, called the financial year. This may be anywhere from 6 to 18 months long, however a preferred range is 12 months.

The Companies House must receive the accounts within seven months of the financial year-end of the company.

Filing annual returns

All companies are required to file a set of annual returns with the Companies House at least every 12 months. The Companies House now sends a form to each company a few weeks before a year of incorporation is complete. The return must be submitted within 28 days of the period along with a £15 filing fee. The form contains information that the company has already provided the Companies House. The content should be verified to be correct and modified where appropriate and submitted on time.

Directors and secretaries

The directors of a company are appointed by the members to manage everyday business operations on their behalf, ensuring that s/he complies with the policy of the company. In safeguarding the shareholders rights, Companies House has set regulations that allow a better selection of the board of directors (BOD). The following are the requirements for the appointment of directors for public companies, however these may be applied in private companies.

The candidate standing for appointment must not

• be disqualified by a court order to act as a director of any company, unless given permission for a specific assignment

• be an undischarged bankrupt of his/her own company

• be over the age of 70 unless approved in a general meeting among the members of the company

The responsibilities, in addition to those owed to the company and all its stakeholders, are to adhere to the regulations of the Companies House. This includes ensuring that all documents are submitted in due time and as required by the Companies Act 1985, especially

• annual accounts;

• annual returns;

• a notification of any change in directors and secretaries of the company or any detail relevant to them; and

• a notification of any change in the registered address of the company.

Failure to deliver documents as required can be held for the prosecution of the director(s), who may be charged for committing a criminal offence with a fine of up to £5,000 imposed for each offence.

A director may be secretary provided s/he is not the sole director. Each company must have a secretary. The secretary of a public limited company needs to be a qualified person in the following manner, the same may be followed in private companies:

• member of one of the Chartered Accountancy or Chartered Management Accountancy bodies of the UK;

• must have held the position of secretary or assistant/deputy secretary of a company on 22 December 1980;

• held the same position with a company for about 3 to 5 years before being appointed presently;

• a legal affairs administrator, such as a solicitor or advocate, in the UK; or
  appears to the director(s) of being capable of handling the position proficiently, as suggested in work experience or membership of a body of authority.

The company secretary does not have a predefined set of responsibilities under the Companies Act; the contract of employment may however define them as per company policy. Generally, the secretary manages administrative matters of the company, including the prompt filing and submitting of documents to the Companies House and other government organisations, as required.

A company secretary does not have any powers as assigned by the Companies Act, but may sign and submit most of the required forms. The secretary however does not enjoy any rights under the Act but may have some as per company policy and as elaborated on the employment contract.