Company Formation

06 January 2022 | Business

Company Formation


Company formation or company registration is the process of incorporating your new company with Companies House. Completing this process means your business becomes an independent legal entity. This means the company will be seen as separate from the owners in regard to assets and liabilities. Incorporating your company provides a good level of financial protection as the owners will only be liable for the value of their shares or guarantee. The process of incorporation is dependent on the type of company you wish to create.

What type of company?

  • Share capital? Is the company to be formed to have a share capital? Companies limited by guarantee can no longer be formed with a share capital
  • Limited or unlimited liability? Are the members to have limited or unlimited liability. If limited liability, is the company to be limited by shares or by guarantee?
  • Public or private limited company? Public companies can offer their securities to the public.
  • How many members? The Companies Act 2006 (CA 2006) allows a single person to form any type of company, public and unlimited companies included.

Forming a company

Private company limited by shares

To form a private company limited by shares, form INOI (Application to register a company) must be completed and filed with the Registrar of Companies. Form INOI sets out:

  • The company’s proposed name including whether the name contains sensitive or restricted words or expressions that require approval
  • The type of company and the members’ liability, in this case, a private company limited by shares.
  • Country of registered office and intended address of the company’s registered office. Where will the statutory registers be kept? If at any place other than the registered office,
  • The proposed articles of association. Unless the model articles are adopted without amendment, a copy of the articles of association should be sent with Form INOI.
  • Details of first directors and secretary (if any) including title, full name and former names, date of birth, country or state of residence, nationality, occupation, service and residential addresses.

Are any service contracts to be entered into with the directors? Are there any other contracts or arrangements with any director or person connected with a director?


A statement of capital and of initial shareholdings

The statement of capital sets out:

  • Each class of shares in the company. The number of shares in each class.
  • The aggregate nominal value of the class.
  • The amount paid up or unpaid on each share.
  • Details of the rights attaching to each class of shares of the company, namely the voting rights, rights to dividend, rights on a capital distribution (including on a winding up of the company) and any redemption right

The statement of initial shareholdings must state the total shares taken by the subscribers on formation including the aggregate nominal value of those shares and the number, class and nominal value of the shares each subscriber takes on formation as well as the amount paid up or the amount to be unpaid on each of the subscriber’s shares.

Private company limited by guarantee

  • Statement of guarantee. A company limited by guarantee formed after 1980 cannot have a share capital. Therefore, to incorporate a company limited by guarantee all the requirements for a private company limited by shares must be met other than the statement of capital and initial shareholdings. Instead of the statement of capital and initial shareholdings, the company must deliver a statement of guarantee. Form INOI must state that the company is to be limited by guarantee rather than by shares.
  • Private companies limited by guarantee may benefit from an exemption from using the word “limited” in the company name if it meets certain conditions. If the exemption is to be used, this should be indicated on Form INOI

Unlimited company

  • Follow the procedure for a private limited company with a share capital but state the company is to be unlimited with or without a share capital on Form INOI.
  • Articles of association. Create bespoke articles of association as there are no model articles for unlimited companies due to their rarity and very specific individual requirements.
  • Company name. Cannot use “limited” in company name.

Company name

  • Limited? Should the company use “limited” at the end of its name or will it take the exemption available in the CA 2006
  • Name search. Check the register at Companies House (as well as other relevant registers such as the Trademark Registry) that their proposed company name is not already registered.
  • Permitted name? Check the proposed name is not prohibited under the CA 2006
  • Business name? Is the company to have a business name?

Method of Incorporation

  • Paper incorporation or web incorporation? Companies House accepts applications for incorporations of companies in either paper format or by electronic submission.
  • Tailor made incorporation or purchase of a shelf company? The alternative to incorporating a company from scratch is to buy an already incorporated shelf company and amend the details of the officers, constitution and share capital as necessary

Our Company Commercial Law team are happy to support you and your business throughout the incorporation process and beyond. We are experienced in supporting companies within multiple industries across the country. We have offices in London, Bury St Edmunds, and Sudbury. We offer a range of Commercial Law services. For more information of the services we offer, get in touch with our team today on 01284 767766.

Please note this article is provided for general information purposes only to clients and friends of Atkins Dellow LLP. It is not intended to impart legal advice on any matter. Specialist advice should be taken in relation to specific circumstances. Whilst we endeavour to ensure that the information in this article is correct, no warranty, express or implied, is given as to its accuracy, and Atkins Dellow LLP does not accept any liability for error or omission.

© Atkins Dellow LLP 2022

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