Your UK Company Formation Documents
Here are the documents you get if you form a limited company in the UK:
- Articles Of Association;
- Certificate Of Incorporation;
- Memorandum Of Incorporation;
- Share Certificates.
The formation agent will typically email these to you, along with your Companies House Authentication Code. He may also post you printed copies. The latter can be useful when you go to your bank to set up a business bank account.
• Articles Of Association
This is a document that contains the purpose of the company and details the duties and responsibilities of its members. It is an important document which needs to be filed with Companies House.
In practice: company formation agents use a template for 99.99% of their clients, as small limited companies tend not to need special rules to operate. As a company is a legal body controlled by individual humans, it needs some rules about how it operates, to define what it and its members can and cannot do.
Some clients worry about this document and think they need to produce their own version. They do not.
The Articles can cover a medley of topics, not all of which are required in a country's law. They may cover:
- The issuing of shares (also called stock), different voting rights after a shareholder dominates or shares equally with all stakeholders;
- Directors meetings - the quorum and percentage of voting;
- Management decisions - whether the board manages or a founder;
- Transferability of shares - assignment rights of the founders or other members of the company;
- Special voting rights of a Chairman, and his mode of election;
- The dividend policy - a percentage of profits to be declared when there is profit or otherwise;
- Winding up - the conditions, notice to members;
- Confidentiality of information and the founders' agreement and penalties for disclosure;
- First right of refusal - purchase rights and counter-bid by a founder.
Only in medium to large companies can the above become a matter for argument; where there's money, people will fight over it!
• Certificate Of Incorporation
This certificate confirms that a business has been incorporated under the Companies Act 2006, at Companies House, as a legal entity with its own identity. It's like a birth certificate for a company. You may be asked to provide it when you apply for a business bank account.
Again, this is not something to fret over. It is generated automatically when your company is formed. You can get a replacement from Companies House if the dog shreds it.
• Memorandum Of Incorporation
This document typically, and only, states the following:
THE COMPANIES ACT 2006
PRIVATE COMPANY LIMITED BY SHARES
MEMORANDUM OF ASSOCIATION
Each subscriber to this memorandum of association wishes to form a company under the Companies Act 2006 and agrees to become a member of the Company and to take at least one share.
Name of each subscriber | Authentication by each subscriber
Again, this is a simple foundation document and nothing to get stressed about.
• Share Certificate
A share certificate is a certificate issued by a company certifying that, on the date the certificate is issued, John Smith-Jones is the registered owner of shares in the company.
- The name and address of the shareholder;
- The number of shares held by him.
Note: The shareholders are the actual owners of the company, not the directors.
A good formation agent will email you the above documents and, for a small fee, print them off and post them to you also. It is not essential to have paper copies, but they are more tangible and are useful for 'show and tell', especially with your bank.
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