Legal Requirements of Business Formations
Types of Companies in UK
How we can help you
We specialise in company formations, business advice and business disputes. Below is a guide to the type of company formations we can help you with. For any enquiries with start-ups, company formations or other business legal aspects contact us for an informal initial conversation.
A company can be easily defined as “A voluntary association formed and organised to carry on a business”
The different types of Companies formed in UK can be categorised as below
PUBLIC LIMITED COMPANY (PLC)
A public company is a corporation whose ownership is open to the public. Anyone can buy shares in the company’s stocks.
PRIVATE COMPANY LIMITED BY SHARES (LTD)
Compared to a public company, a private company is the most common kind found that cannot be owned by any members of the public and is within the limited set of individuals who are registered to it.
COMPANY LIMITED BY GUARANTEE
This type of company is those that don’t have shareholders, like smaller, non-profit organisations. They have a group of members who act as guarantors and agree to contribute a nominal sum towards the winding up of the company, in the case of such an event occurring.
UNLIMITED COMPANY (UNLTD)
The main difference between limited and unlimited company is that there is no formal restrictions on the amount of money that shareholders have to pay if a company goes into formal liquidation.
LIMITED LIABILITY PARTNERSHIP (LLP)
They are not legally treated as partnerships in the UK. They are incorporated bodies that are more similar to the other types of company. Under this company, some or all of the partners have to have limited liabilities, which means that they are responsible for their own misconduct or negligence, rather than being responsible as a collective. Here the partners are allowed to directly manage the business whereas other company types, the shareholders have to vote to elect a board of directors, and the board employs other people to manage the company.
CUMMUNITY INTEREST COMPANY
This are for companies which are more of charitable in nature and that are not driven by the objective of increasing profits for their shareholders, but with the goal to use their assets and profits for the good of the communities that they work for.
INDUSTRIAL AND PROVIDENT SOCIETY (IPS)
This kind of Company used to be a major company type for many years serving Communities but currently have been taken over by companies like Community interest company or cooperatives and community benefit societies
ROYAL CHARTER (RC)
This type of company means that they have been granted power or a right by the monarch. Though this type still exists the mode of starting company has changed considerably with time.
Legal requirements of business formations – A Private Ltd Company
Setting up your own private limited company means having a company that is legally an entity in itself, has its own finances and also gets to keep the profits to itself after paying the taxes.
By registering it with the Companies House we Incorporate it as a Private company.
The legalities that needs to be followed to Incorporate it are:
A suitable Company Name – The name selected should be unique, the reason being, the set rules under law does not allow to register a name which is considered the same as that of an existing company, or one which could be considered offensive or illegal.
A registered Office Address- The address should be an existing one in UK in the same Country the Company is registered. A PO box can be used provided it has a physical address and a postcode. The online register will have the company address listed for Public.
A Company needs at least one Director on board who will be responsible for the physical and financial movements of the Company. Shares and shareholders are part of a Private company. This means they’re owned by shareholders, who have certain rights. A company limited by shares must have at least one shareholder, who can be a director. You will own 100% of the company if you the only share holder. There is no limitations to the number of shareholders in a company.
To register a company a legal statement signed by all initial shareholders agreeing to form the company called the ‘memorandum of association’ is mandatory. Also written rules about running the company agreed by the shareholders, directors and the company secretary called the ‘articles of association’ is also necessary for registration.
Once all the above data is available it can be registered as a Private Company. Also within 3 months of registering the company with Companies House, you willl need to register it for Corporation Tax. Understanding your tax liabilities is important once registered.
Part of legal procedure is to see if the necessary paperwork on Trademarks, copyrights and patents are covered under the limited company.
Insurance is a major necessity in setting up a company. Some are mandatory as per law some are taken as a matter of our own protection. We must for example have employers’ liability insurance, motor insurance, insurance demanded by any contracts you may have, and insurance for certain types of engineering equipment etc.