Formation of a Company

Question 1

What are the 2 methods of forming a company?

Answer 1

1. Incorporation from scratch at CT
2. Conversion of a shelf company

Question 2

What is a shelf company?

Answer 2

A pre-formed company registered by an agent or solicitor, ready to be purchased and customised by a client

Question 3

What documents must be submitted to incorporate a company?

Answer 3

• Memorandum
• Articles of Association
• Registration fee
• Form IN01

Question 4

What does Form IN01 include?

Answer 4

• Company name and Registered Office
• Registered email
• Whether public/private; limited by shares/guarantee
• Statement of Capital or Guarantee
• Statement of compliance
• Proposed officers
• Statement of lawful purpose

Question 5

What is a pre-incorporation contract?

Answer 5

A contract made on behalf of a company before it is incorporated

Question 6

What does CA 2006 say about pre-incorporation contracts?

Answer 6

• A company cannot be bound in a pre-incorporation contract as there is no legal personality
• A contract purporting to be on behalf of a company before it is formed has the effect of being made with the person purporting to act for the company
• this person is helf personally liable under the contract unless the contract provides otherwise

Question 7

How can a company adopt a pre-incorporation contract that was ‘made’ on its behalf?

Answer 7

By novation - creating a new contract with all parties’ agreement after the company is incorporated

Question 8

Can a company be sued on a pre-incorporation contract?

Answer 8

No - unless the contract is novated, liability remains with the promoter

Question 9

How is the company name changed during shelf company conversion?

Answer 9

• By special resolution of the shareholders or another method permitted by the Articles
• File Form NM01 at CH with the resolution and fee
• Name change takes effect on issue of new certificate of incorporation

Question 10

How are shares transferred from shelf company subscribers to clients?

Answer 10

• Use a stock transfer form to transfer shares
• Update the register of members (this is what legally effects the transfer)
• File with CH only if PSC details are changed.

Question 11

What must be considered regarding a company’s Articles when converting shelf company?

Answer 11

• Shelf companies may use Model Articles or bespoke versions
• Amendments are made by special resolution
• File the new Articles and resolution at CH