FAQ

Reasons for forming a limited company

The main reason for limited company formation is to take advantage of the limited liability status it provides. This means that the company is a legal entity in its own right, and only the assets of the company are available to creditors and not the assets of individuals running the company. You would only be liable for the money you have paid, or agreed to pay for shares in the company.

It also means that another limited company cannot be formed with the same name, or one that is deemed too similar.

You may also find that a limited company formation makes it easier to attract business, as a lot of companies seem to be more willing to deal with a contractor that is a limited company. Obtaining finance for your business may also be helped by this. It would also maintain continuity of a business in the event of selling the business, the death of, or changes to directors.

On the downside, you will have to file accounts and annual returns every year at Companies House, and will incur fines, and possibly striking off if this is not done. All of this information will be available on public record, which means that your accounts will be available for anyone to see.

Which type of company do I need?
A Private Limited company is the most common, and is suitable for the majority of businesses. A Public Limited company has the advantage of being able to offer shares to the general public but is subject to other restrictions. Companies Limited by Guarantee are more suited to non-profit making organization, and the main reasons to be registered as a Limited Liability partnership are to have limited liability status while still being taxed as a partnership.
If you wish to discuss which company would be best for you, please call us and we will be happy to help.

Can I have any name I want?
No, your company name will not be accepted if it is the same or too similar to a name that is already registered or if it contains a sensitive word (such as International, Group or British) or it is offensive. If you are not sure if your name will be acceptable, please call us and we will be able to advise you.

Can I change the name at a later date?
Yes, the company has to pass a special resolution in a general meeting to change the name, but as long as the new name is accepted it is a relatively simple process.

What is a Registered Office?
It is an address to which all official correspondence from Companies House and other bodies will be sent. The address must be in England or Wales (or Scotland for Scottish registered companies).

Can anyone be a director?
Mostly, but there are some exceptions, such as anyone who is an undischarged bankrupt, or disqualified by a court.

What is the Memorandum & Articles of Association?
It is a document showing the objects, regulations and powers of the company.

What is the share capital?
Every company limited by shares will have a share capital. The amount shown in the Memorandum of Association is known as the nominal or authorised capital. When shares are issued they are shown as allotted or issued capital. The share capital is the fund which creditors of a company look to for security of payment of their debts.

What is the authorised share capital?
Also known as the nominal capital, it is the limit in money up to which shares can be issued.

Is there a minimum or maximum authorised share capital?
No. However, a public limited company must have an authorised capital of at least £50,000.

Can shares be in any currency?
Yes, you can have different types of shares in different currencies. Public limited companies must have at least £50,000 of its issued capital in sterling before it can commence business.

Can I change the share capital?
Yes, increasing the capital is usually a simple process, but decreasing may be more complicated depending on whether all the shares have been issued or not.

If your question has not been answered here please call on 0870 446-3000 or e-mail us, we will be happy to help.

eformation Client Login
Username:
Password: