[ESTABLISHING A BUSINESS ENTITY IN ENGLAND] 164
UK legislation provides model articles for use where a newly formed company has not drawn up its own articles. Share capital Usually, a company will have a share capital. The share capital is made up of shares that have been issued and allotted to its shareholders (also called “members”). Each share will have a nominal value. As no minimum nominal value is laid down by law it can be as little as £0.01 or less. Frequently the nominal value of each share is £1. The share capital may be in any currency, for example euros (€), or it may be made up of various currencies. A company formed under the Companies Act 2006 is not required to state its authorised share capital in its articles. All it has to do, when applying for registration with Companies House, is to notify the initial capital and to send in a notification each time new shares are issued. Furthermore, there is no tax payable by reference to the level of capitalisation. As such, it is possible to incorporate a subsidiary with a substantial capitalisation, in order to enable it to stand alone without the support of a parent guarantee, and to avoid the need for subsequent share issues, without incurring any tax liability. A company needs only one shareholder. The shareholder may be an individual or a company and does not need to be UK resident or incorporated in the UK. Company name The name of a company must end with the word “Limited” or the abbreviation “Ltd” unless a special exemption, available for non- commercial purposes only, has been granted.
The proposed company name must not be the same as any existing company name. There are also restrictions on names likely to mislead or cause offence, criminal names, names that may suggest a connection with the government or a local authority, and names containing certain specified “sensitive” words, such as Insurance or Trust. Fladgate LLP can run a check of a chosen company name, to ensure that it is available and capable of being approved. Directors and company secretary A company must have at least one director who is an individual. There are a few restrictions on the choice of directors, for example, a director must be at least 16 years old, must not be disqualified from acting as a company director and must not be a bankrupt individual. Directors may be of any nationality. There is no longer any legal obligation for a company to appoint a company secretary, although one may be appointed. The company secretary keeps the company’s records and ensures that the company complies with the main provisions of company law. Where a company has foreign owners, it may be advisable to appoint a company secretary. Registered office A company must have a registered office in the UK for delivery of official documents and correspondence, for instance from Companies House or HM Revenue & Customs, the UK’s tax authority . This address does not have to be the same as the business address. Accounting reference period The accounting reference period is normally a period of 12 months. It is calculated from the date of incorporation to the last day in the
ILN Corporate Group – Establishing a Business Entity Series
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