Incorporation of company/LLP/Partnerships Flashcards
Company formation (20 cards)
What are the two methods for formation of a company?
- Incorporation from scratch - submit relevant information to Companies House / online
- Shelf company conversion - purchase of a shelf company followed by formalities to make necessary changes
What must be delivered to Companies House to incorporate a new company from scratch?
- A copy of the company’s memorandum
- Articles (if the company does not intend to use Model Articles)
- The fee
- An application for registration (Form IN01)
What does the Form IN01 contain?
- The company’s proposed name and registered office (appropriate address)
- Whether the company is private or public
- Company’s registered appropriate email address for Companies House use
- Whether the company is going to be limited by shares
- Statement of capital and initial shareholders
- Statement of company’s proposed officers and PSC
- Statement of compliance
- Statement for lawful purpose
What happens after the Registrar of Companies approves the application for incorporation?
The company is sent a certificate of incorporation
The certificate of incorporation sets out:
- name of company
- company’s registered number
- date of incorporation
What is the significance of the date the certificate of incorporation is issued by Companies House?
The company becomes a legal entity
What is a shelf company?
A ready formed company which is not yet assigned to a business (it is not trading), but is registered at Companies House
It has been more common traditionally for a solicitor to purchase a shelf company on behalf of clients and make necessary changes (rather than incorporate from scratch)
Does a shelf company already have a certificate of incorporation?
Yes - it has the certificate of incorporation with the unique number and date of incorporation
- But it has not been trading yet
What are the advantages / disadvantages of converting a shelf company
- Advantage: time - ready to trade and enter into contracts immediately. Ideal for establishing a company at short notice during non-business hours
- Disadvantage: need to spend time following procedure to transfer and convert
What changes is a client likely to need to make to a shelf company?
- Company name (changed by special resolution)
- Registered office
- Articles - common for shelf company to be incorporated with MA
- Members, directors and company secretary (order of appointments and resignations is very important)
What is required to change a company name?
- Special resolution
- Form NM01
- Resolution to change a company’s name must be passed before the end of 28 days beginning on circulation date
How can a company alter its Articles?
- By special resolution
- Amended articles and special resolution need to be filed at Companies House
Change the shareholders of a company (transfer the shares)
The shares held by the subscribers are transferred using a stock transfer form
- The client becomes the shareholder once it is entered on the register of members
When does a new company name become effective?
From the date on which the new certificate of incorporation on change of name is issued by Registrar of Companies
- Company registration number will not change
What are the post-incorporation steps?
Practical issues for directors to attend to:
- Chairperson: decide whether to elect a chair and if they have casting vote in a tied board resolution
- Accounting reference date - default is the last day of the month in which the company was incorporated (Form AA01)
- Appoint an auditor by board resolution
- Tax registrations - company needs to register for corporation tax, VAT, PAYE and NI
- Shareholder agreement
Pre-incorporation contracts
Contracts are enforceable as personal contracts against the person purporting to act on the company’s behalf before the company has been incorporated
- Person signing the purported agreement between the unincorporated company and third party is personally liable
What document is required to incorporate an LLP?
Form LL IN01 with a fee to Companies House
The form includes:
- LLP’s name
- Registered office address
- Registered email address
- Details of each member
- Details of designated members (an LLP requires at least two designated members to deal with Companies House filing requirements and sign the accounts)
- Details of persons with significant control
- Statement of compliance
What is the quickest way to incorporate an LLP?
Two ways:
- electronically through electronic software filing (£30 fee)
- paper filing (£100 fee)
Same day service is available for both
What are compliance requirements for an LLP following incorporation?
Once registered, LLPs have continuing obligations in respect of the following:
- filing information with Companies House (e.g., change of name, change in membership, creation of charge, annual confirmation statement)
- preparing annual accounts to send to members and file at Companies House
- maintain adequate accounting records
- maintain certain in-house records (register of members and PSC)
- disclose registered name and office
- disclose name of every LLP member on all letters, unless have more than 20 members
How are partnerships formed?
No formality is required to form a partnership. It is established when there are at least two persons carrying on a business with a view to making profit
Partnership Agreement or Deed
Most partnerships have some form of express written partnership agreement which governs:
- commencement and duration
- name and place of business
- capital, profits and losses
- drawings / salary
- accounts
- dissolution of partnership
- duties, powers and restrictions on partners
