Why a Company?

There are a number of reasons why a company is the preferred vehicle for carrying on a business.  These include:

Legal entity. A registered company is a legal person in it's own right and separate from it's members and officers. This could be beneficial in the event of the company failing or being liquidated for any reason as personal liability does not accrue to the shareholders other than for any outstanding amounts payable on partly paid shares.

Types of company. There are four types of company that may be incorporated in the UK:

• Private companies limited by shares (Limited or Ltd),
• Public companies limited by shares (Public Limited Companies or plc or PLC)
• Private companies limited by guarantee and not having a share capital, or
• Unlimited companies with or without a share capital.

A company? Some of the main reasons for following the corporate route are:

• To take advantage of the possible limitations on the liability of members,
• To benefit from the consequences of separate legal personality
• To enable the raising of share capital or other finance beyond the resources or willingness of a single individual,
• Possible tax benefits,
• To benefit from tax efficient business expansion schemes,
• To enable employee participation in profits through employee share schemes,

Essential requirements for a company. The following are the basic items to be considered for the formation of a company:

Name - No two companies may have the same name so it is essential to see if the one which you have selected is available. This can be done by accessing the Companies House web site at http://www.companieshouse.gov.uk/info. Alternatively, we are happy to undertake the search on your behalf.

Location of the registered office. All companies are required to have an office to which forma; notices may be sent. This must be specific; a PO Box is not acceptable. The location of the registered office determines the domicile of the company as being in England and Wales or Scotland. For companies incorporated in England or Wales the main office of the Registrar of Companies is in Cardiff whereas that for Scotland is in Edinburgh. Once a company has been incorporated in either England and Wales or Scotland the registration cannot currently be changed. This means that, should an English company decide to move from London to Edinburgh, it must retain it's registered office in England or Wales even though the rest of it's operations are moved to Scotland.

A company's constitution is regulated by two main documents the memorandum of association and the articles of association.

The memorandum of association must cover:

1. the name of the company,
2. that the registered office will be in England and Wales or Scotland,
3. the object for which the company was formed,
4. a statement that the liability of members is limited (unless this is not so),
5. the amount of the authorised share capital.

The articles of association regulate the conduct of the company's affairs and set out in detail the rules for the issuing of shares, the calling of member's meetings, the powers of the directors, etc. There is a model set of articles set out in a statutory instrument (SI 1985 as amended by SI 1985 No 1052) which companies may adopt in their entirety or, with alterations to suit the needs of the company. At New Companies Limited, the articles are amended to make company procedures more flexible and user friendly.

Directors. Any person, provided they have not been disqualified by the court under the Company Director's Disqualification Act 1986 or by some rule in the company's articles, may be a director. In addition, directors can, if a director of a public company or of a private company which is a subsidiary of a public company, be required to stand down when they are aged seventy. In the case of a private company there need be only one director, but that sole director cannot be the company secretary also. A public company must have a minimum of two directors.

Company secretary. All companies must have a company secretary. In the case of private companies there is no requirement for a formal qualification. The secretary of a public company is, with limited exception, required to be professionally qualified. The Companies Act 1985, provides the following acceptable qualifications:

A member of:

1. the Institute of Chartered Secretaries and Administrators;
2. the Institute of Chartered Accountants in England and Wales;
3. Institute of Chartered Accountants in Scotland;
4. the Institute of Chartered Accountants in Ireland;
5. the Chartered Association of Certified Accountants;
6. the Institute of Cost and Management Accountants; 
7. the Chartered Institute of Public Finance and Accountancy;
8. a barrister, advocate or solicitor called or admitted in any part of the United Kingdom;
9. is a person who, by virtue of holding or having held any other position or his being a member of any other body, appears to the directors being capable of discharging those functions.

Registers

Statutory registers.
A company is required to maintain certain registers and it is desirable to keep others for practical administrative reasons.

Compulsory registers.

1. Register of members. This must be properly maintained as it is a fundamental record of individual members.
2. Register of directors and secretary.
3. Register of directors interests.
4. Register of mortgages and charges.
5. Minutes. A company must keep proper records of directors and members meetings.
6. Share certificates. Whilst not a register, a company is required to issue share certificates to all members.

Non compulsory registers.

1. Register of applications and allotments.
2. Register of transfers.
3. Register of debentures.

All companies supplied by New Companies Limited include the above registers as part of the package.

Elective regime.

Elective regime (for private companies)

Private companies are permitted to adopt an "elective regime" which enables them to dispense with some of the formalities normally required by Companies Legislation. The object is to simplify the administration of the smaller company in the following respects:

1. Extend the period during which directors may allot shares (a fixed or indefinite period),
2. To dispense with the laying of accounts and report before general meeting,
3. To dispense with holding annual general meetings
4. Election as to majority required to authorise short notice of meeting (between 90% and 95%),
5. Election to dispense with the annual appointment of auditors.

If you wish to adopt any or all of the above exemptions, please indicate in the order form below  those required.

a. PO Box 10052, Bank Chambers, 7 Bridge Street, Ballater, Aberdeenshire, Scotland, UK, AB35 5ZF.
t. +44 (0) 13397 53187      f. +44 (0) 13397 56220
e.enquiries@new-companies.com

orders by email: orders@new-companies.com

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