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September 19th 2014 / BY: Wisteria

Considerations when completing a company formation – Part 1

There are many factors that should be taken into consideration when completing the company formation process.

Company name

The first thing to think about when completing a company formation  is your company name. Every private limited company must be registered with a unique name ending in ‘Limited’ or ‘Ltd’. This appears in the title of the Memorandum and Articles of Association for identification purposes. Companies House may reject your company name if it contains sensitive or offensive words or is too similar to another company name. Therefore before submitting a company formation application, you should check to find out if your company name is the same as an existing company or contains sensitive words. Find out if your company name is available here: www.wisteriaformations.co.uk.

Directors

During the company formation process you will need to provide details of the director(s) of your company.  The directors are authorised by the Articles of Association to manage the business of your company and to exercise its powers. Their prime duty is to manage the company for the benefit of its members. The Companies Act 2006 states that at least one natural person must be appointed as a director at all times (s. 155). This person must be at least 16 years old. Once this requirement is satisfied, it is currently possible for a corporate body to be appointed as a director of your company. Directors are required to give details of a service address for the receipt of official notices.

Shareholders and share capital

Shareholders, also known as members, are the owners of private limited companies. Ownership is divided between the shareholders according to the proportion of shares they own. When you form your company you will need to give details of all shareholders of your company and the type and amount of shares they own. Share capital is the funds raised by your company by issuing shares in return for cash or other consideration. As all private companies limited by shares are owned by at least one shareholder, they all have a share capital consisting of one or more share classes. When you go through the company formation process you must submit a statement including the total number of shares to be taken on incorporation, the aggregate nominal value of the shares, the rights attached to each class of share, the total number of shares in each class and the aggregate nominal value of shares in each class, the amount to be paid up by shareholders and the amount to be unpaid on each share.

company formation

For more information on what to consider when completing the company formation process see Part Two of this guide. If you have any further questions or queries email our company formations team at formations@wisteria.co.uk or call us on 020 8951 6347.