15. Company incorporation

Question 1

What are the steps in incorporation a company?

Answer 1

• A company is formed under the Companies Act 2006 by subscribers whose name are included in the Memorandum of Association
• Available names need to be checked with the Companies House to ensure that there is no existing company with the same or similar name
• Incorporation documentation is delivered to Companies House, including application form, registration of Memorandum of Association and a copy of Articles of Association, statement of compliance and fee.
• Upon incorporation, a certificate of incorporation is issued, which is conclusive evidence of the incorporation of the company.

Question 2

What is a fast incorporation?

Answer 2

same day incorporation at a higher fee

Question 3

What is a shelf company?

Answer 3

Company that has already been incorporated by a service provider and is instantly available to use

Question 4

What is a reserved company?

Answer 4

incorporated by service providers and transferred within six months.

Question 5

In what circumstances will the registrar refuse to register a name?

Answer 5

• Existing company with similar/identical name
• Name does not contain the required ‘ltd’, ‘plc’ or ‘unlimited’
• name is offensive
• use of name would be a criminal offence

Question 6

What is the memorandum of association?

Answer 6

Short document evidencing the subscribers’ intention to form a company and agree to (requires signature):

• Name of company
• Share capital
• Limited liability
• Intended duration (if applicable)
• Public company (if applicable)

Question 7

What would the Memorandum of Association also include prior to the effect of CA 2006?

Answer 7

• Location of registered office
• A statement that the company is a public company (if applicable)
• Objects of the company - clause that restricted the activities of the company to those contained within ( if a company undertook an activity that was not included, the act was ultra vires (outside the company’s powers) and void.)

Question 8

What do the Articles of Association include?

Answer 8

• Notice and conduct of meeting
• Winding up
• Appointment of directors
• Company seal and signing authority
• Dividends and reserves
• Accounts and audit
• Minute book
• Votings at meetings
• Directors and secretary

Question 9

What are the model articles?

Answer 9

Articles created by the Companies Act 2006. These may be adapted entirely, partly or excluded entirely.

Question 10

What information is required for the registration application?

Answer 10

• Company’s proposed name
• Address of registered office
• If liability is limited
• Public or private company
• Names and particulars of directors and secretary
• Model articles or own
• Details of share capital and subscribers

Question 11

What is a statement of compliance?

Answer 11

Confirms that the requirements of CA 2006 have been complied with.

Question 12

Who may need a trading certificate?

Answer 12

A public company before they commence business or exercise borrowing powers.

Question 13

What are the post incorporation procedures of a company?

Answer 13

• Hold an inaugural meeting
• Issue share certificates
• Update register of members
• Update register of directors

Question 14

What does the certificate of incorporation include?

Answer 14

• The name and registered number of the company
• Date of incorporation
• Whether limited or unlimited company
• If it is a private or public company
• Where it is registered

Question 15

What matters are discussed at the inaugural meeting?

Answer 15

• Certificate of incorporation
• Appointed of directors, chairperson, secretary
• Noting the registered office
• Appointing solicitors, bankers, auditors
• Allotting shares
• Adopting company seal, authorised signatory list

Question 16

What is included in the register of members?

Answer 16

• Names and addresses of members
• Date when person registered as member
• Date ceased to be a member
• Number of shares held

Question 17

Who must the register of members be available to?

Answer 17

Must be kept available for inspection by any member of the company without charge and by any other person upon payment of fee.

Question 18

What information is included in a register of directors?

Answer 18

• Name and former name
• Service address
• Resident country
• Nationality
• Business occupation
• Date of birth

Question 19

What is a share?

Answer 19

A right to a specified amount of the share capital of a company, carrying with it certain rights and liabilities, while the company is going concern and in its winding up.

Question 20

What is the authorised share capital?

Answer 20

The total amount of share capital which the company is authorised to issue.

Question 21

What is the nominal value?

Answer 21

(aka par value)

Amount (currency) shown on a share certificate

Question 22

What is issued share capital?

Answer 22

Nominal value of shares which have been issued to members

Question 23

What is called up share capital?

Answer 23

Value of issued shares that remain unpaid, and whose holders have been called upon to pay for the shares.

Question 24

What is paid up share capital?

Answer 24

Aggregate amount of money paid up on shares which have been issued.

Question 25

What is reserved capital?

Answer 25

Capital which the company has resolved not to call except in the course of winding up.

Question 26

What are par value companies?

Answer 26

Registered with a share capital and have shares which are expressed as having a nominal value.

Question 27

What are non par value companies?

Answer 27

Have shares not denominated in any currency. They have unlimited shares and may have a guarantor.

Question 28

What are the different types of shares that could be issued?

Answer 28

Ordinary shares- right to vote at general meetings and to receive a dividend (if one is paid). Preference shares - no right to vote at meetings, but usually have the right to be paid a fixed dividend and to be paid before ordinary shareholders in the event of liquidation. Redeemable shares - can be repurchased by the company at a future date Bearer shares - owned by whoever has them in their possession

Question 29

Rights of members when transferring shares.

Answer 29

Members are usually able to transfer their shares freely, although pre-emption rights may be granted to existing members. Pre-emption rights required new shares to be offered to existing shareholders first?

Question 30

What must share certificates include according to the CA 2006?

Answer 30

- How many shares and what class - Nominal value of shares - That shares a fully paid - any distinguishing numbers assigned to them(?)

Question 31

What is a dividend?

Answer 31

A share of the after-tax profits of a company distributed to its shareholders. Companies can only distribute from realised profits, not anticipated profits.

Question 32

What documentation would be required to be kept at the registered office?

Answer 32

- Register of members, directors, secretary and charges - Minute book - Memorandum and AoA - Certificate of incorporation - Common seal - Register of sealing

Question 33

How may the common seal of a company be used?

Answer 33

Only used by the authority of the directors and signed by at least one authorised person and a witness.

Question 34

What is the register of sealing?

Answer 34

Keeps a record of what has been sealed.