The following Points are crucial when an entrepreneur decides to start a company in the UK:
- Companies used for international trade and investment are Private or Public Limited Companies.
- A company incorporated in the United Kingdom has the same powers as a natural person.
- There are restrictions on trading and business activities: specified types of service, including for example banking, insurance, financial services, consumer credit-related services and employment agencies, are not permitted without strict approvals.
General Incorporation Procedure
- Submission of the Memorandum and Articles of Association,
- Declaration of Compliance and Statement by the First Directors and Secretary,
- Notification of the location of the Registered Office and payment of the requisite fee to Companies House-a registered office must be maintained in the United Kingdom. However, there are various instances where only a flexi desk is permitted and no physical office is required.
- A UK company is incorporated in either England or Wales ,Cardiff, Edinburgh, Scotland, Belfast and Northern Ireland.
- Incorporation of a Company in London can take less than a day.
The Company’s Name
- Documentation must be in English.
- Any name in a language other than English must be accompanied by a translation to ensure that the name is not restricted.
- If the company is incorporated in Wales there is a proviso that documentation in Welsh will be accepted.
- Any name that is identical or similar to that of an existing company is not acceptable.
- Any name considered to be offensive or suggesting criminal activity is not acceptable.
- Any name that suggests the patronage of the Royal Family or the Government of the United Kingdom is not acceptable.
- Restricted names include Assurance, Bank, Benevolent, Building Company, Chamber of Commerce, Fund Management, Insurance, Investment Fund, Loans, Municipal, Reassurance, Reinsurance, Savings, Trust, Trustees, University or their foreign language equivalents.
- ny company name implying financial service activities such as banking and insurance require consent or license.
- Limited (Ltd) or Public Limited Company (PLC) are the required suffixes to denote limited liability.
Other Mandatory Requirements.
- A Private Company must have at least one director, and a Public Company must have a minimum of two directors. A sole director cannot also be company secretary. The directors can be natural persons or bodies corporate. They may be of any nationality and need not reside in the UK. If there is more than one director, one of them can also be company secretary; however, it is recommended that a professional secretary with relevant experience be appointed. Details of the directors appear on the public file, but anonymity can be maintained by the use of third party professionals.
- A company secretary must be appointed. The company secretary may be a natural person or a body corporate. They can be of any nationality and need not reside in the United Kingdom.
- For Private Companies the minimum number of shareholders is one, for Public Companies the minimum number is two. A shareholder may be a corporate body or an individual. Details of shareholders appear on public record but anonymity may be retained by the use of nominee shareholders or holding companies.
Types of Companies
There are four types of company that can be registered under the UK Laws:
Private companies limited by shares – the liability of any share holder cannot be more than the amount that is unpaid on shares held by them. When shares are issued, there are a certain number of shares in any company. There is a particular face value on each share and, say 100 shares comprise the share capital of the company. Two may be issued and fully paid up and a balance of 98, namely £98 is the extent of the liability in relation to the company.
Private Company Limited by Guarantee – the liability of any members/shareholders is limited to the amount that they have agreed to contribute to the company’s assets if it is wound up. This type of company is generally only used for charitable work and cannot be used as a company trading for profit.
Private Unlimited Company – this is a private company with no limit as to members liability.
Public Limited Company (plc) – the shares in a plc may be offered for sale to the general public but the liability of shareholders as with private limited companies cannot exceed the amount unpaid on shares held by them.
Private Company: the minimum issued capital is one share, but further capital is usually issued to reflect the stability and strength of the company. A private company is normally incorporated with an authorized share capital of £1,000.
Public Company: the minimum authorized share capital for a public company is £50,000, of which £12,500 must be paid up (in case of liquidation the full £50,000 must be paid). The minimum issued capital is two shares.
Permitted and non-Permitted Shares
- Ordinary shares, preference shares, deferred shares, and redeemable shares and shares with or without voting rights are Permitted.
- Bearer shares are not permitted.
Annual Taxation and Fees
- Tax is paid by companies in the UK based on audited accounts submitted to the Inland Revenue at the end of the company’s financial year.
- International tax planners are able to utilise UK structures to minimise taxation for international business.
- The United Kingdom is party to more double tax agreements than any other sovereign state.
- The UK has signed double taxation agreements with 100 countries and thus enjoys the most extensive double taxation agreement network in the world. There are no licence fees.
- Tax is levied at 20% on a UK company that has net profits under £300,000, and a tax rate of 30% is levied where the profits are over this figure.
Financial Statement Requirements
- All UK Companies must file accounts with the Registrar of Companies.
- A Company must appoint an auditor, and audited accounts must be filed with the Companies Registry. In a large number of cases companies with sales of under £90,000 are exempt from this requirement and those with turnover of less than £350,000 need only produce abbreviated accounts with a special accountant’s report.
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