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COMPANY LAW (3): THE LANGUAGE OF COMPANY LAW - FORMING A PRIVATE LIMITED COMPANY

In this part, we are going to look at the formal process for incorporating a private limited company in the United Kingdom. The formal application process is set out in the Companies Act 2006.


Of course, one of the initial things to decide is what the company’s name is going to be. This is important because the company name must be legally acceptable. For example, the company name cannot be the same as that of an existing company. Therefore, before submitting the application for registration for incorporation as a private limited company, it is always a good idea to check the index of company names kept by the Registrar of Companies.


The promoter, or promoters, of a new company must subscribe their names to a memorandum of association. The memorandum of association used to be a document which set out the reasons for a company existing. However, since the Companies Act 2006, the memorandum of association is only really relevant to the process of application for registration. It is not part of a company’s constitution.


The memorandum of association must contain two clauses:

1. a statement of intent from the subscriber's (promoters) to form a private limited company, and

2. a statement by the subscribers that they agree to become members of a private limited company and take at least one share each.


At this stage, it is important to mention another important company document: the articles of association. We will look at these more closely in another post. However, it is important to note that articles of association are a company document which set out how a company will regulate itself. It defines and regulates the relationships which exist in a company (for example, between the officers of the company and its shareholders, etc), deals with shares and membership, the directors of the company, and even the way the articles themselves can be altered or amended.


The application for registration of a private limited company is made on an official form. This form is called form IN01. The form requires the applicant to give certain important information about the proposed company.


Part 1 of the form requires the applicant to give details about the proposed company. These details include, for example, the proposed name of the company, the type of company it is going to be, the proposed situation of the company’s registered office (whether it is to be in England, Scotland, Wales, or Northern Ireland), and the intended address of the registered office.


Part 2 of the form deals with the proposed officers of the company, including the proposed company directors and company secretary. We will look more closely at who the officers of a private limited company are, their roles, functions and duties, etc, in another post.


Part 3 of the form is headed ‘Statement of Capital’. In this part, the applicant must give details of the initial shareholdings in the company and also a statement of the share capital of the company. Again, we will look at the financing of private limited companies in another post.


Once form IN01 has been completed, and any documents that need to be submitted with it have been prepared, they should be sent to the Registrar of Companies, together with the appropriate fee. The process of registration of a new private limited company usually takes about five days.





COMPREHENSION EXERCISE

Answer the following questions:

1. Which piece of UK legislation deals with the registration and incorporation of new private limited companies?

2. Why is it a good idea to check the index of company names held by the Registrar of Companies?

3. What document must the promoters of a new private limited company subscribe their names to?

4. What company document defines and regulates the relationships within a company?

5. What is the name of the official form that must be completed and submitted to the Registrar of Companies?


The answers are given in the Answer Key, below.






ANSWER KEY

1. The Companies Act 2006

2. Because the proposed name of the company must be legally acceptable.

3. The memorandum of association

4. The articles of association

5. Form IN01



Note: This article is intended for study and educational purposes only. It is not intended to be an authoritative statement of English law or for giving advice. If you need legal advice and guidance, you must contact an appropriate lawyer.


© Cambridge Legal English Academy 2020






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