| Everything you need to know about a Limited Company Formation |
There are four main types of company:
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Private company limited by shares - members' liability is limited to the amount unpaid on shares they hold.
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Private company limited by guarantee - members' liability is limited to the amount they have agreed to contribute to the company's assets if it is wound up.
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Private unlimited company - there is no limit to the members' liability.
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Public limited company (PLC) - the company's shares may be offered for sale to the general public and members' liability is limited to the amount unpaid on shares held by them.
Foerster Business Solutions deals with private companies limited by shares or limited by guarantee.
The Companies Act generally allows one or more persons to form a company for any lawful purpose by subscribing to its memorandum of association.
Every company must have formally appointed company officers at all times.
A private company must have at least one named director our standard M & A’s are written for a minimum one director and one secretary, for all other scenarios please contact our office 08443 57 58 59, formal qualifications are not required. A company's sole director cannot also be the company secretary.
In general terms anyone can be a company director but there are some rules. You cannot be a company director if you are an un-discharged bankrupt or disqualified by a court from holding a directorship, unless given leave to act in respect of a particular company or companies.
Company Name
There are also some restrictions on your choice of company name.
The restrictions are:
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you cannot register the same name as another company
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the use of certain words is restricted
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names likely to cause offence are not allowed
It is important to check whether your chosen name is similar to any other name already on the Companies House register. If an objection is made within the 12 months following the incorporation of your company that your chosen name is too like another name, you could be directed by the Secretary of State to change your company’s name.
Statutory Registers
The company must maintain registers for the following:
The register of members (shareholders)
The register of directors and secretaries
The register of directors interests
The register of charges
Principle
In basic terms the Limited Liability company allows commerce to flourish by enabling credit to be extended with minimum risk to all parties and is an important factor in the trading success of the United Kingdom. In a Limited Company, the owners (shareholders) are not personally liable for the debts of their business or any claims made against the company.
This legal limitation, called "limited liability" is created through registration at Companies House. The process is known as Incorporation. It is obvious why the majority of small business owners are so attracted by Limited Liability. Almost every business will accumulate debts that create the risk of being sued
Avoiding danger
Without limiting your personal liability, every business owner would be completely legally responsible for the debts Your personal assets would therefore be at risk. With limited liability, personal assets can remain in tact, even if the business fails under a burden of debt. A UK private limited company is able to distributed profits to its shareholders by way of a dividend.
Taxation
The rules on both personal and corporate taxation are regularly modified by the Chancellor of the day but it is normally the case that profits distributed through dividends are a tax efficient means of rewarding entrepreneurs for the commercial risks they take.
The most common form of Limited Liability in the UK is the Private Limited Company of which there are over one million currently registered at Companies House. These companies can be recognised easily by the suffix Limited or LTD at the end of their name.
Public Information
Limited Liability companies are obliged by law to maintain records of their affairs at Companies House. In this way it is possible for anybody to purchase copies of this information before trading with the company.
This simple mechanism balances the benefit of Limited Liability given to the owners of companies by allowing their creditors to assess the risks they may be taking in providing goods and services on credit. |
