Formation of a Company in the UK

Companies are formed in the United Kingdom by preparing Form 10, Form 12, the memorandum of association and articles of association and sending them to Companies House, with the prescribed fee, which is presently set at £20.00, however an express registration service costs £50.00.

Form 10 is made available by Companies House – in the UK, this is the trading name of the Register of Companies (“the Registrar”) – to nominate the first directors of the company, in addition to the first registered address of the company in England, Scotland or Wales. The directors must provide their home address, occupation,, date of birth and the other companies in which they have been a director over the last five years.

Form 12 is simply a statutory declaration that the legal requirements to form a company have been complied with, and must be signed by a solicitor or the person or one of the first directors of the company, and witnessed by a commissioner of oaths or solicitor.

There are four basic types of companies that may be formed in under UK law:

  • Private companies, limited by shares

The main features of companies limited by shares are that shareholders’ liability is limited to the amount that they must pay for their shares. These are the popular form of company for this reason. Shares may be issued without a requirement for immediate payment for the shares, however like other companies, the company may issue ‘calls’, which are demands issued by the company to the shareholders for payment. In the event that the shareholder does not pay the call, the shares may be forfeited to the company.

Private companies limited by shares may have 1 subscriber.

  • Private companies, limited by guarantee

Shareholders’ liability is capped not limited in the same way for companies limited by guarantee. When a shareholder purchases shares in a company limited by guarantee, the shareholder must agree to contribute to the company’s assets in the event of a winding up. This limit, or guarantee may be as little as £1..00.

Private companies limited by shares may have 1 subscriber.

  • Private unlimited

Unlike the other forms of companies, shareholders’ liability in the event of a winding up is unlimited, which makes a shareholding in unlimited company the rough equivalent to trading as a partnership or sole trader, where personal liability is also unlimited.

Private companies limited by shares must have 2 subscribers.

  • Public limited

Public companies differ from the types of private companies listed above in that the shares of the company may be offered to the public at large. Nevertheless, shareholders’ liability is restricted in the same way as that which applies to private companies – the shareholders’ liability is restricted to the sum they are obliged to pay for their shares.

Private companies limited by shares must have 2 subscribers.

Registered Office

The purpose of the registered address is for statutory notices to be sent by the Registrar and correspondence by the public. In the event that a company does not respond to correspondence from the Registrar, it will eventually be struck off the Register of Companies, as the address is not effective.


For private entities, a director may also be the secretary provided there is another director. Undischarged bankrupts and those disqualified by the court from holding office are prohibited from accepting appointments as directors unless special permission has been granted. Minors may be appointed in special circumstances. The Act provides that the age of statutory senility for directors of public companies reaching the age of 70. A general meeting may be convened however to reappoint the director.

Memorandum of Association

The memorandum of association defines the corporate powers of the company. They govern the powers of the company, and is one of the two documents comprising the constitution. That is, what is has the power to do, and what it does not. These provisions of the memorandum are the ‘objects’ of the company. When a company purports to exercise a power that it does not have, it is said to be acting ultra vires. The memorandum must specify the authorised capital of the company, that is the number and class of shares that it may issue; the registered office.

Articles of Association

The articles of a company govern the relationship between the company, the directors, and the shareholders. These are the key relationships within the company and the articles serve to regulate the internal affairs of the company between these capacities. It is the articles of association that are referred to when seeking to determine the powers of the company, shareholders or directors.

The articles for instance may dictate that the company must have a minimum number of directors.

Shareholders’ Agreements are contracts between the shareholders of a company to regulate the conduct of the shareholders as between one another, and may impose obligations and duties over and above that existing in the articles of association.

The Role of the Company Secretary

The company secretary is the chief administrative officer, and has the power to bind the company in respect to its administrative affairs. The secretary’s responsibilities are defined by their contract of service to the company and the articles of association, and includes the keeping of minutes, maintaining the statutory registers and preparing notifications to shareholders, amongst many other responsibilities.

The Register of Companies

Companies House maintains a register of all the companies existing in the United Kingdom. The Register is public and available to be searched by members of the public. The activities of the company must be reported to the Registrar so that the Register is kept current. the Registrar provides forms to do this, such as appointments of directors and the company secretary (Form 288a), resignations of directors and the company secretary (Form 288b), changes to the company name, changes to the registered address (Form 287), returns of allotments of shares (ie, when shares are issued to shareholders) (Form 88(2)), and increases in share capital (Form 123).