What is this company type used for
A Private Limited Company, which is by far the most common type used for small businesses of all kinds and often now used as a vehicle through which, say a computer consultant, will enter into a contract with an employer.
What are the minimum requirements to form this company ?
A Private Limited Company can be registered by one person who is both the Director and Shareholder, there is no need for a Secretary. If the company only has one Director then that person must be a real person, not a corporate body or a partnership. There must be at least one share issued which usually has a par value of £1 but can be one penny or any other value. The company must have a Registered Office address which must be located in the country of registration, i.e England and Wales, Scotland or Northern Ireland. The Registered Office does not have to be the place of business.
What do I get ?
We offer several levels of formation for this company type starting from as low as £57.00 . For a complete list of what is included with each level please refer to the section below entitled '1.1 Private Limited Company - What package do you require ?'.
A Private Company Limited by Guarantee, which is used for organisations where the principle aim is to provide a beneficial service to either a specific group of people such as a club or society or to the public.
A Private Company Limited by Guarantee has the same requirements as a Private Limited Company but must have at least one Member instead of a Shareholder. This type of company is intended to operate as a committee of interested Members and delegate its day to day operations to a committee of Directors or Trustees as they are also known. It is common practice to appoint a Secretary to undertake administrative tasks.
A Private Company Limited by Guarantee Exempt Under Section 60, which is used for organisations where the principle aim is to provide a beneficial service to either a specific group of people such as a club or society or to the public.
A Private Company Limited by Guarantee has the same requirements as a Private Limited Company but must have at least one Member instead of a Shareholder. This type of company is intended to operate as a committee of interested Members and delegate its day to day operations to a committee of Directors or Trustees as they are also known. It is common practice to appoint a Secretary to undertake administrative tasks. A private company limited by guarantee can be exempt under Section 60 of the CA 2006 from using the suffix ‘Limited’ or ‘Ltd.’ if its Articles comply with the following provisions.
Providing that the purpose of the company, its objects, are appropriate, our standard Articles are drafted to automatically provide for these provisions.
A Limited Liability Partnership, or LLP, is a form of legal business entity with limited liability for its members, which is established with a view to profit. The main difference is that an LLP has the organisational flexibility of a partnership and is taxed as a partnership. In other respects it is very similar to a private limited company.
A Limited Liability Partnership, or LLP must have at least two Partners or Members, neither of which need be real persons. They must at all times have at least two of the Partners or Members registered as Designated Members.
With the agreement of the other members, a member may become a designated member at any time. Designated members have the same rights and duties towards the LLP as any other member. The LLP agreement and the general law govern these mutual rights and duties. However, the law also places extra responsibilities on designated members. In particular, designated members are responsible for:
They are also accountable in law for failing to carry out these legal responsibilities.
A Public Limited Company, which is used for larger ventures and are able to raise capital from selling their shares to the public.
A Public Limited Company must have at least two Directors, one of which must be a real person, and a Secretary. It must have at least one shareholder and an issued share capital of at least £50,000 before it can commence trading. (The company can be registered with just one issued share for the purpose of registration). The Registered Office requirements are the same as a Private Limited Company.
A Flat / Estate Management Company is a company formed to manage a property divided into a number of separate flats. Each flat owner usually has a lease of their own flat. The Company may also hold the Freehold (or lease) of the entire building. As members of the Company, the flat owners have a say in running and maintaining the building. Where the members own a share in the Company, the Company’s articles of association have specific clauses to ensure only the lessees can hold the shares and such shares must be transferred to the new owner of the flat it relates to. Normally the capital of the Company will correspond to the number of flats, i.e. if there are six flats, the capital will be £6.00 divided into 6 shares of £1.00 each. Sometimes the capital will reflect the cost of obtaining the Freehold, i.e. the Freehold is bought for £12,000 so the capital is £12,000 divided into 6 shares of £2,000 each. When a flat is sold, the existing flat holder is then reimbursed for his investment in the Freehold. In other cases the capital will be split into shares that reflect the value of each individual flat, i.e. 2 shares of £1,750, 3 shares of £2,000 and 1 share of £2,500. Irrespective of the value of any individual share or whether or not it is jointly held, the holder or holders thereof will only be entitled to cast one vote at general meetings.
The same structure can be used for what is commonly known as an ‘Estate Management Company’ which is a development of Freehold houses where the Company maintains the common parts, such as access roads, parking bays, communal gardens etc.
The holding of a share in the Company, whether solely or jointly entitles the holder thereof to be appointed a director of the Company. The number of directors is restricted to the number of flats or houses even where the lease or freehold of a flat or house is held in joint names.
A Secretary may be appointed, but this is purely an administrative position and gives the person in question no rights to vote etcetera unless that person is also a director, but that director will still only be entitled to cast one vote.
The Registered Office Address can be located at the property, but it is often better to have this at the Company’s accountants so they can keep a watching brief over the Company and ensure that the Company’s accounts and annual returns are filed on time.
In some circumstances a developer will wish to allot the shares relating to each flat or house progressively as they are sold. In order to maintain control of the Company up to the point of the last share being allotted, the capital is split into two classes, i.e. if there are six houses, 1 “A” share and 5 “B” shares. The “A” share is held by the developer and has enhanced voting rights so that they maintain control of the Company until the last house is sold. The “A” share is then transferred to the owner and converts to a “B” share equal in every way with the other “B” shares.
A Flat / Estate Management Company can be registered by one person who is both the Director and Shareholder, there is no need for a Secretary. If the company only has one Director then that person must be a real person, not a corporate body or a partnership. There must be at least one share issued which usually has a par value of £1 but can be one penny or any other value. The company must have a Registered Office address which must be located in the country of registration, i.e England and Wales, Scotland or Northern Ireland. The Registered Office does not have to be the place of business.
What is limited by Guarantee ? A Private Company Limited by Guarantee has the same requirements as a Private Limited Company but must have at least one Member instead of a Shareholder. This type of company is intended to operate as a committee of interested Members and delegate its day to day operations to a committee of Directors or Trustees as they are also known. It is common practice to appoint a Secretary to undertake administrative tasks. A private company limited by guarantee can be exempt under Section 60 of the CA 2006 from using the suffix ‘Limited’ or ‘Ltd.’ if its Articles comply with the following provisions.
Why use two share types ? Two share types enbale the company to do all sorts of wonderfull things !
Why does it matter ? Free Hold, This means the company holds the free hold !
A companys registered office is where the companies legal documents are usually kept. The registered office address must be in the country of incorporation as chosen above. When choosing England & Wales your registered office address can be in either. The registered office address can be any fully qualified postal address including PO Box's.
How do I choose a name ?
You may have a great idea for a company name but not every name is allowed ! Your chosen name could either be already taken, to close to an existing name or it may contain sensitive words that need justification or approval. We recommend you use our easy 'Check Name' facility which will help give an early indication if there may be problems with your chosen name.
Choosing which ending to have for your company does not affect the trading style of your company or what your company can or can not do, so, it is a matter of personal choice.
What is an SIC Code ?
The classification provides a framework for the collection, tabulation, presentation and analysis of data, and its use promotes uniformity.
In addition, it can be used for administrative purposes and by non-government bodies as a convenient way of classifying industrial activities into a common structure.
The term ‘alphabet shares’ is commonly used to describe a company’s capital structure, which is divided up into multiple classes of shares each being designated with a letter of the alphabet. For example, “A” Ordinary Shares, “B” Ordinary Shares etcetera.
If a company only has one class of share, dividends must be paid proportionally and at the same rate to each shareholder. If the capital is split into two or more classes then provided the Articles are drafted accordingly, dividends can be paid at different times and at different rates on each class.
There are various scenarios that can be considered. Two common ones are as follows;
1. A company has two equal partners, John and David holding 50 Ordinary Shares each. David has been generating a lot of new business and it is felt only right that he should be rewarded with a larger percentage of the profits.
It is decided to increase the Company issued share capital by allotting two additional shares designated as one “A” Ordinary share and one “B” Ordinary share. As the existing holdings are equal, these have the same rights as the current shares since their allotment will not affect the voting control of the Company. The Company then amends its Articles to allow for the payment of ‘differential dividend payments’. David is now rewarded at the end of the year with a 5% Dividend whereas John receives 2%. Next year it may be John’s turn to be rewarded for his additional work.
2. Mark and Ann run a small building company. Mark holds 75% of the shares and Ann 25%. Mark works hard but the business would not survive without Ann looking after the books and chasing orders and payments while also looking after two children. If they reward themselves with Dividend payments, then Mark, unless he does messy dividend waivers will get 75% of the dividend. Mark is a higher rate taxpayer so this is not as tax efficient as it could be. As Ann only works part time for the business, she is on a lower tax code. By creating “A” and “B” shares, in this case Non-voting, they were able to pay Ann a larger percentage of the dividend so saving tax by taking advantage of her lower tax code for that year.
It is essential that in the second example Ann is seen to be a contributory partner in the business. She cannot be a ‘sleeping partner’.
We at Chettleburgh’s specialise in creating these share structures and it is most cost effective to built them into the new company at the time of registration, although a company’s Articles can also be amended at a later date.
The Memorandum and Articles of Association of any company are an invaluable document. Often they depict the trading style and day to day running of the business. Many legal organisations require to see a copy of these documents so its always good practice to have several copies, maybe one at your location, one with your accountant and one stored in a safe place like a bank. Here you can order any number of additional copies that you like.
Each package we supply has a number of these documents included. If you would like more then simply use this field to tell us how many more you require and we will calculate the cost based on the scale of charges below;
Memorandum & Articles of Association Scale of Charges Printed & Supplied
Company type
No.Included
+5
+>
Private Limited
--- Just registration
1 copy will be supplied in PDF format
--- Economy package
3
£10 each
£8 each
£7 each
--- Complete package
6
£6 each
Limited by Guarantee
Limited by Guarantee Exempt under Sec. 60
Limited Liability Partnership
N/A
Limited Liability Partnership (all members designated)
Public Limited Company
Flat / Estate Management Company
10
£5 each
Example :
25 Copies of Mem & Arts required for Flat / Estate Management company ;
10 copies include within the incorporation package 5 copies @ £8 each = £40 5 copies @ £7 each = £35 5 copies @ £5 each = £25
Total = £100 for the printing and binding of 25 copies of the Mem & Arts.
Every company needs somewhere to put its money and quite often you can't get an account for the business until it has been formed which usually means a second trip and scheduled appointment. Let us take this hassle away for you, by choosing our bank account service once your company is registered your company details are passed onto our chosen bank (Barclays) who should then contact you to arrange your facilities. By using our service you are quite often entitled to additional banking services which aren't available to you if you were to arrange this yourself. (these services are subject to change, are specific to each bank and conditions apply).
