A limited company is a legal entity used by individuals or businesses to conduct business. Vakilsearch brings you a brief on a UK limited company and its statutory requirements.
Introduction on Statutory Requirements for Forming a UK Limited Company
Forming a UK Limited Company requires meeting specific legal obligations or the Statutory Requirements for Forming a UK Limited Company. You’ll need a unique company name, a UK address, at least one director and shareholder (who can be individuals or other companies), and two key documents outlining the company’s purpose and internal rules. Additionally, you’ll need to register individuals with significant control, file annual updates, and comply with relevant tax and accounting regulations. Consulting official resources or seeking professional advice is recommended for a comprehensive understanding. These are just some of the things that you should know before incorporating your business as a UK limited company.
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What Does It Mean to Operate a Limited Company?
While knowing about the Statutory Requirements for Forming a UK Limited Company, we should also be aware of operating a limited company. You must abide by certain rules and regulations specific to limited companies. Therefore, all business entities operating in the UK must serve as a limited company and not a general trading company. It is necessary to meet certain requirements to run a limited company.
Here are the requirements:
- The company must have a share capital.
- The company must have an undertaking.
- The company must have an actual number of members/shareholders.
- The company must have a registered office.
- The company must have a registered agent.
- The company must have a company secretary.
- The company must have a director.
What Types of Limited Companies Are There?
Limited companies are available in three main types in the UK:
- Private company limited by shares
- Public limited company
- Private company limited by guarantee.
Statutory Requirements for Limited Companies
As a limited company, you may only be able to operate in a specific industry. It is due to the specific requirements that each industry has when operating under the laws of the UK.
However, each industry has a set of rules and regulations that must be followed.
These include:
1. Shareholding: The minimum shareholding for a limited company in the UK is one share.
2. Business Activities: A limited company may only carry out a specific set of business activities. These include financial activities, property leasing, management services, and the disposal of goods and services.
3. Directors: Limited companies must have at least one director. Every director must comply with a number of statutory requirements to be an effective director of a limited company.
4. Registered Office: A limited company’s registered office is where the company’s register is kept.
What Documents Do I Need to Incorporate My Company?
When you register your UK company, you will also need to submit a Memorandum of Association. It is an important legal document that records the required information about your company and its shareholders. You will also need a company account, which lists shareholders, directors, and officers.
When Should You Submit Your Incorporation Paperwork?
The most common time to apply for a company number is between 01 July and 31 October, the year you are forming your company. However, you can apply in any month during this period. Try to apply during the month of March for the lowest company formation fees.
How to Form a UK Limited Company
You must first obtain a ‘company number’ registration number to start your own UK company. You can apply for a company number once your company is incorporated. Once you have your company number, you can submit a formal application to companies house. Get in touch with Vakilsearch today to learn more about our application process. Once your application is accepted, you will need to file the appropriate documentation with the company’s house. The most common form is a Memorandum of Association, which records the shareholders and their shares.
Annual Returns:
- The principal activity of the business;
- Address of the company’s shareholders;
- Type of limited company, such as a limited by shares or a limited by guarantee;
- Directors’ names and addresses;
- Company secretary’s name and address (if applicable);
- Information on the number and value of shares issued by the company, as well as who owns them; and
- Address of registered office;
- If applicable, where details of the company’s debts are kept.
While there are no late filing penalties associated with annual returns, companies house can initiate strike-off and/or prosecution proceedings against the company and its directors if the deadline is missed.
Event-Driven Requirements
Companies House must be notified of corporate changes under the Companies Act 2006, including:
- Notification of changes to the company’s officers or their personal information;
- Any changes to the company’s registered office;
- The allocation of shares;
- A change in the accounting period end;
- Anyone can register an interest in a charge with interest in the charge, not just the company;
- Changing the name of the company;
- Changing the constitution; and
- the re-registration of a company.
Companies must also maintain a minute book and register the company either at their registered office address or at another location.
Corporate Tax Filings
Companies must prepare and file a Corporation Tax (CT) return to report their corporation tax to HM Revenue and Customs (HMRC). It is necessary to file a corporation tax return even if it has no tax to pay unless HMRC advises otherwise. The company is dormant for corporation tax purposes.
CT returns must include, but are not limited to, the following:
- Capital allowances for business assets purchased;
- Gains on assets that are sold more than their purchase price;
- Directors’ loans not repaid at the end of the financial year;
- Directors’ loans repaid to claim tax;
- Tax relief to be claimed; and
- Losses carried forward from the previous accounting period.
Paying corporation tax is due nine months and one day after the company’s chargeable accounting period ends, and filing a corporation tax return is due 12 months after the company’s accounting period/year ends. ‘Large’ companies are required to pay their UK corporation tax obligations in quarterly installments, with the first instalment normally due six months and 13 days after the start of the accounting period.
Penalties for late filing of a CT return include:
| Time After The Deadline | Penalty |
| One day | £100 |
| Three Months | Additional £100 |
| Six Months | 10% penalty added to the unpaid tax estimated by HMRC |
| Twelve Months | Additional 10% penalty added to the unpaid tax estimated by HMRC |
If the return is filed three times in a row late, the £100 penalty increases to £500.
Annual Accounts Filing Requirements
The annual accounts of a UK limited company are normally due to be filed with companies house by nine months after the end of the company’s financial year. In the coming months, we will discuss this in more detail.
Conclusion
A limited company lets you set up a legal entity to conduct business. You can form a UK limited company in a number of ways. There’s no minimum share capital for a UK limited company. Let’s say a company doesn’t have a share capital. It’s a ‘no-sharer’ company, which means shareholders are not required to put money into the company. However, there are specific requirements to incorporate a company. Here’s what you need to know. Let Vakilsearch help you make the process easy!
FAQs
Who can form a UK limited company?
In the UK, a limited company can be formed by anyone who is at least 16 years old and not disqualified under the Companies Act 2006. This includes individuals, other companies, and partnerships.
What documents are required to register a UK limited company?
To register a UK limited company, you need several documents including the Memorandum of Association, Articles of Association, Form IN01 (Application to register a company), details of company directors and shareholders, and a Statement of Capital and Initial Shareholdings.
What are the responsibilities of directors and shareholders in a UK Limited Company?
Directors of a UK limited company have various responsibilities such as filing accounts and tax returns on time, complying with company law and the company's Articles of Association, acting in the company's best interests, and maintaining accurate records. Shareholders have responsibilities including voting on important company matters, attending general meetings, receiving dividends if declared, and complying with company law and the company's Articles of Association.
What is the law for company formation in the UK?
Company formation in the UK is governed primarily by the Companies Act 2006. This legislation sets out the requirements and procedures for forming and running a company in the UK.
What is the process for forming a UK Limited Company?
The process for forming a UK Limited Company involves choosing a company name and checking its availability, preparing the Memorandum and Articles of Association, completing and submitting Form IN01 to Companies House along with the required documents and fees, awaiting approval and confirmation of company registration from Companies House, and setting up a company bank account and registering for taxes if applicable.
Can I register a UK limited company online?
Yes, you can register a UK limited company online through the Companies House website using the WebFiling service. This allows for a faster and more convenient registration process compared to submitting paper forms by post.
