[ESTABLISHING A BUSINESS ENTITY IN ENGLAND] 165
calendar month, one year from the date of incorporation (the “accounting reference date”). This can be changed, subject to certain provisos. Accounting reference periods commonly selected are either the calendar year or the year from 1 April to 31 March, which is slightly in advance of the UK tax year (ending on 5 April). Special approval requirements for a company It should be noted that running the business of a company or branch in the UK may require certain trading licences or other approvals. For example, the formation and the operation of a financial services business will usually require authorisation from the UK Financial Conduct Authority. Fladgate LLP can advise you if authorisation requirements apply to your business. 1.2 Establishing and operating a branch (UK establishment) A branch should be regarded as an extension of the foreign company. An authorised person appointed to run the branch can enter into transactions with third parties in the foreign company’s name. The branch may be of the foreign company itself or one of its subsidiaries. In any case, under the UK system, the branch is not a legal entity in its own right and therefore the foreign company remains fully liable. There are some registration requirements relating to both the foreign company and the branch that have to be completed within one month from opening the UK establishment. 1.3 Limited Liability Partnership It is possible to form a limited liability partnership ( LLP ) in the UK. LLPs have the advantage of being taxed as a partnership but at the same time having limited liability. The result is something of a hybrid between a company and a partnership.
LLPs with professional service providers (e.g., lawyers and accountants) and in the fund and asset management sector. Whereas a company is already quite user-friendly by international standards, an LLP is even more flexible from a company law and internal structure point of view. However, it is not yet widely used as a legal form for new business start-ups outside the areas referred to above. are particularly popular 1.4 Partnerships and Limited Partnerships Foreign nationals may also establish a partnership ( general partnership ) in England, although the partners will have unlimited liability. Therefore, this structure is seldom used. Another possibility is to form a limited partnership ( LP ). In contrast to the LLP, in England and Wales, the LP has no legal personality of its own. Its partners, provided they are not involved in managing the LP, will be protected by limited liability, but it must have at least one general partner, whose liability is unlimited. The general partner may be a limited company. LPs are especially preferred by investment funds. They are neutral for tax purposes and are not taxed separately. 1.5 Using commercial agents As an alternative to forming a company or establishing a branch, a foreign company may also decide to work in the UK market through a commercial agent. Relations between a commercial agent and his or her principal are governed by the Commercial Agents Regulations 1993. These regulations contain a series of mandatory provisions designed to give the commercial agent greater protection. It should be emphasised that compensation is nearly always payable if the contract is terminated.
ILN Corporate Group – Establishing a Business Entity Series
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