Setting up a New Company
If you have decided to set up a new limited company, there are a number of points to consider before the official formation.
Decide on a company name. This must be unique, and not very similar to other companies otherwise it may be refused. It is worth spending time thinking about the right name for your company as it reflects your brand, quality and company message to the outside world.
This can either be your home address, your trading premises, a virtual or third-party address or your accountant. The address must be in England and Wales and consideration should be given to whether you wish for your personal address to be public if used as the registered address.
When forming the company, a Standard Industry Classification code is selected, identifying the trade or industry your company represents and describing what your business does. You can view the list here.
You must have at least one Director to form a company. Secretaries are no longer compulsory, though you can appoint one if you wish. You will need to gather together all the nominated directors’ names, addresses, nationalities, dates of birth and eye colour for Companies House security.
You need to consider how the shareholdings in your new company will be allocated. Will you own 100% of the shares or will you split them with other shareholders? If so, what proportion will you choose? Will different share classes be useful if a 50-50 split will not always be the case for the splitting of dividends?
Number of Shares
The number of shares created needs to be created initially and it is a good idea to consider if shares might be given or sold to others in the future. If this is the case, it is better to start the company with a hundred shares rather than one so there are enough shares in existence to split.
You will need the have handy the names, addresses, nationalities, dates of birth and eye colours for each shareholder, plus two further pieces of security information including the first three letters of their passport, national insurance number, home town, mother’s maiden, or fathers first name.
Person of Significant Control Register
Anyone with over a 25% shareholding or voting right must now appear on the ‘People of Significant Control’ record. This information is held at Companies House and updated via the confirmation statement which keeps the registration up to date.
Articles of Association
The articles of association are the rules which govern the running of the company. Usually the ‘model’ articles are opted for upon formation which cover standard rules for the directors, shareholders, voting rights and how dividends are issued and distributed.
Memorandum of Association
This is an agreement which contains the authority of the directors and shareholders to form the company.
What’s the bottom line?
Give careful thought and consideration to the company before incorporation, including what the future might look like, who will likely be involved and be sure to gather the authority and personal details of each person involved in advance. It may also be a good time to work out a service level agreement between the directors to clarify how you will work together and what is expected