SETTING UP A LIMITED COMPANY (England and Wales).

Are you considering setting up an English company?

Over nearly 60 years in business, Mundays has incorporated many thousands of companies, and our corporate team have provided the guidance needed to create strong foundations for these businesses to be successful. 

We have prepared answers to some of the most frequent questions we are asked.

Should my company be limited by shares, or by guarantee?

If you want to start a business in England with a view to making a profit, you should consider setting up a company limited by shares.  This structure will:

  • create a professional image and improve credibility
  • enable you to sell a percentage of the business to other people
  • enable you to issue various classes of shares, making it easier to sell a stake in the company, or transfer ownership of shares

If your limited company has more than one shareholder it is advisable to have a Shareholders’ Agreement governing relations between co-owners alongside the constitutional documents. Our corporate team would be happy to help you with this.  

Companies limited by guarantee are also possible but these are most commonly used for setting up a non-profit organisation or charity.

What is the Companies Act 2006?

This is the main piece of legislation which governs company law in the UK. It is the longest piece of legislation ever enacted in the UK, with over 1,300 sections.  The Act governs all aspects of company life and requires certain registers to be maintained and returns submitted to the registrar of companies (known as Companies House).  These can be produced and maintained as part of the company secretarial service we offer.

What is a company’s constitution?

Anyone incorporating a company puts their name to two documents: a memorandum of association and the articles of association. The former formally documents the incorporation of the Company; the latter comprises the company’s governing rules. These internal regulations can be tailored to suit your needs or model forms adopted instead.

What are the Directors’ responsibilities?

Directors of a limited company must (amongst other obligations):

  • follow the company’s rules, shown in its articles of association
  • keep company records and report changes
  • file accounts and company tax returns and other notifications throughout its existence
  • tell other shareholders if they might personally benefit from a transaction the company makes
  • ensure the company pays corporation tax

There are also strict duties to act in good faith and in the interests of the members arising from common law. Further guidance about being a director of a UK company can be found on the GOV.UK website.

How long does it take to incorporate a company?

Under normal circumstances and with the provision of full details before 12 noon, we can incorporate a company on the same day. The regime for incorporated companies imposes requirements to provide information and ensure records and registers are properly maintained.  We provide a company secretarial service to assist clients with these for an annual fixed fee.

For more information on this service, or to enquire about incorporating a new English limited company, please contact our Company Secretarial Administrator Kirstie Collins Kirstie.Collins@mundays.co.uk

The contents of this newsletter are intended as guidance for readers. It can be no substitute for specific advice. Consequently we cannot accept responsibility for this information, errors or matters affected by subsequent changes in the law, or the content of any website referred to in this newsletter. © Mundays LLP

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