Setting Up A Private Limited Company Top Tips

Date Added 01.09.15

Please note that this article should not be relied upon for the provision of, or as a substitute for, legal advice.

  1. Why should you set up a private limited company?

If you are a sole trader or partnership, you are personally liable for the business debts. Your personal possessions are therefore at risk. A company is recognised as a separate legal person and therefore it can enter into contracts in its own name, and is liable for its own debts. Accordingly, creditors who are owed money must generally take action against the companynot the members or directors.

  1. Company Name

You may already be trading with a business name and wish the new company to continue with this name. However, you cannot register a company name that is the same or similar to any company name which is currently in use. There are also certain words which are considered sensitive or prohibited and therefore will not be allowed. Tollers can advise you whether a proposed company name will be accepted as well as checking whether your proposed name infringes any registered trademarks.

  1. Company Address

Every company must have a registered office address. This address is publically available and is where communications and notices may be sent. Commonly, the registered office address is the place where the company carries on its business or, alternatively, the address of the company’s solicitors or accountants if they deal with administrative issues on the company’s behalf. Tollers provides company secretarial services which includes use of our offices as your company’s registered office address.

  1. Directors and Members

The directors will manage the company on a day-to-day basis.  Directors can either be individuals or even another company but you must at all times have at least one human director. When a person becomes a director they become subject to several duties. Breach of any such duties can lead to personal liability. Tollers can advise you or your proposed directors on their duties. The members of a company are the entities who own the shares. Subject to any terms in a shareholders agreement or the articles of association (see tips 7 and 8 below) the members of a company have voting rights proportionate to the number of shares they hold.

  1. Share Capital 

It is possible to have different share classes which have different rights. For example, some shares may not have any right to vote; other share classes may have a preferential right to dividends (i.e. they get a fixed amount of the profits before the remainder is split between the remaining shareholders).

  1. Statutory Registers

Every company must keep and maintain an up-to-date register of its shareholders, directors, director’s residential addresses and secretaries. A company must hold these at its registered office address or a designated alternative address. Tollers provides company secretarial services which includes updating the Company’s statutory registers and registering Tollers office address as the alternative place for inspection of the Company’s registers.

  1. Articles of Association

Every company must have articles of association.  These are a publicly available document and form an internal rule book for the company which dictates matters, including how board meetings and shareholder meetings are held, how directors are appointed, rights attaching to different classes of shares (see tip 5 above) and restrictions on the transfer of shares. A company can either use standard articles of association (adopted by default) or adopt its own which are bespoke to its needs.

  1. Shareholders Agreement

Shareholders’ agreements are private, confidential contracts setting out the relationship between shareholders and how they will run the company. This is no requirement to have a shareholders’ agreement.  However, we always recommend that shareholders have an agreement put in place in order to protect their positions from the start (particularly minority shareholders) and typically such agreement would cover what happens on a shareholders’ death, how disagreements are to be resolved and how key decisions are made (which can avoid costly disputes in the future).

  1. How long does it take?

Companies House usually takes about a week to process applications. There is also a same-day service. If you would like Tollers to look after the incorporation process for you and ensure all steps are covered, please give us a call for a quick fee quotation.

  1. Who can help me?

Talk to Tollers!  Our Corporate team can give you all the assistance you need in setting up and managing your new company. Get in touch today call 01908 396230

Please note that this article should not be relied upon for the provision of, or as a substitute for, legal advice.

 

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