How to form your limited company

Lawpack on May 12, 2020

Once you know the name of your limited company – the name(s) of its shareholders and the name(s) of its directors – you’re now ready to form your limited company.

Here’s a list of the company formation forms you need to form a limited company.

All of these company formation forms must be completed and then you must register your limited company at Companies House. Remember that you must be consistent with wording when referring to your limited company name on all documents filed at Companies House. Choose ‘Limited’ or ‘Ltd’, but don’t use both.

Memorandum of Association

The Memorandum of Association simply sets out the name of the limited company and who the initial subscribers (shareholders) are.

You must complete the name of the limited company and the names and signatures of the subscribers. This must be sent with Form IN01 to Companies House.

Articles of Association

The limited company’s constitution is known as its Articles of Association. Articles of Association contain the company’s regulations for its internal management.

The official title of this document used to be Table A but it’s now called ‘Model Articles’.

If you adopt the Model Articles, you don’t need to submit the limited company’s proposed articles but you should indicate on Form IN01 that you have adopted the Model Articles. Just because you have adopted the Model Articles, this doesn’t mean you can’t amend them but, if you do, you must pass a special resolution and notify Companies House within 15 days.

Lawpack’s Articles of Association is to be used when forming a private limited company by shares.

Application to Register a Company Form IN01

Form IN01 gives details of the limited company directors, company secretary and the address of the limited company’s registered office. It also states that the limited company directors have complied with all proper procedures to form a limited company.

For those of you familiar with the old limited company formation forms, this Form IN01 replaces Form 10 and Form 12, and is the new ‘master’ form for incorporating your limited company. Although the new form is considerably longer than Form 10 and Form 12, due to the extra detail required, it’s likely that a continuation sheet of sorts will be required (and this sheet is provided as a download when you purchase our Limited Company Formation Kit).

Here is an outline of what needs to go where, who needs to sign what, and we also aim to highlight the more important parts of Form IN01:

Part 1 – Company details

This is where you enter the limited company’s name and its first registered office. You will also need to confirm the limited company type and confirm that the limited company name does not have any ‘sensitive’ words.

It’s highly unlikely that you will need to tick the box so as not to include ‘Limited’ in the name. If you do want to do this, you should contact your accountant.

Also in this section of Form IN01, you must indicate what type of Articles of Association will be used. Most new companies will use the Model Articles in its entirety and tick ‘private limited by shares’ in option one. But if you require option two or three, or the Articles will be restricted, you should contact your accountant or solicitor.

Part 2 – Proposed officers

Companies House distinguish between corporate and non-corporate directors and company secretaries. Company directors and company secretaries now have more protection as they can select to use a service address rather than their residential address to show on the limited company register and at Companies House.

The company secretary (if there is one after 6 April 2008) must sign and date Form IN01. The directors must also sign and date Form IN01.

Part 3 – Statement of capital

This section of Form IN01 is where the limited company’s share capital is noted. It’s also where the share types and values are entered. The Companies Act 2006 has removed the need for an authorised number of shares and only requires a note of the issued share capital.

The standard class of share capital is known as ‘ordinary shares’ and they normally have a value of £1 each for private limited companies. It’s sensible that all shares are paid in full as if they are not, the limited company or its administrators could chase for the remainder at a later date.

The number of shares that the limited company has is up to you, but it’s usual to have a few hundred shares. We would not recommend a value of over £4,000 as this may close avenues when you want the limited company to dissolve.

You can also specify in this section of Form IN01 any specific share rights, for example, the ordinary shares above could have voting rights and the right to receive a dividend, whereas another class of share may only have the right to receive a dividend but no voting rights. If so, you will need to enter the particulars for each non-normal share type on Form IN01.

Part 4 – Statement of guarantee

This section of Form IN01 only relates to limited companies that don’t have any share capital. If your limited company does have share capital, then this section of Form IN01 can be ignored.

Part 5 – Statement of compliance

In this section of Form IN01, each subscriber must sign Form IN01 to confirm all the information on the form is correct. It’s also advisable to complete the ‘Presenter information’ section in case Companies House have any queries. We would suggest that each is completed to avoid any rejections.

Finally, after completing the form you will need to send Form IN01, along with the necessary payment, and Memorandum of Association plus copy Articles if you’re not using Model Articles, to the registrar at Companies House.

Make sure to take copies of Form IN01 before sending off the originals, as Companies House charge for issuing copies of submitted documents.

The registrar will then send you a Certificate of Incorporation. The limited company comes into existence from the date on this Certificate which will also show the Company Number and where it’s registered.

Congratulations! You have now registered and formed a limited company.

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Published on: October 11, 2010

Dos and don’ts when naming a limited company

Lawpack on May 12, 2020

Once you’re ready to set up your limited company, it’s time for you to name the limited company and then determine whether you’re allowed to use that company name.

But beware the following rules for naming limited companies:

Naming a limited company – Rule #1

When naming your limited company you must include the word ‘Limited’ at the end of it.

If you’re incorporating a company in Wales (i.e. its registered office is in Wales), the name may be written in either English or Welsh. The Welsh word for ‘Limited’ is ‘Cyfyngedig’. You can also use the abbreviations ‘Ltd’ or ‘Cyf ’.

Naming a limited company – Rule #2

Don’t use a company name that is identical or similar to one which is already on the Limited Company Register at Companies House.

For example, ‘Lawpack Publishing Limited’ and ‘Lawpack Publishing Company Limited’ would be considered the same.

With ‘Lawpack Publishing Limited’ and ‘Law Pak Publishing Limited’, for example, the names would not be refused initially, as they’re not identical. But Law Pak Publishing Limited may have to change its name if there was a successful objection from Lawpack Publishing Limited.

Naming a limited company – Rule #3

Don’t use a company name that is offensive or would constitute a criminal offence.

Naming a limited company – Rule #4

Don’t use a company name that is so misleading as to the activities of the limited company that it causes harm to the public.

Naming a limited company – Rule #5

Don’t let your company name give the impression that the limited company is connected with HM Government or a local authority.

Naming a limited company – Rule #6

When naming your limited company make sure that the company name doesn’t include any sensitive words or expressions, such as:

  • Association
  • Assurance
  • Assurer
  • Authority
  • Benevolent
  • Board
  • British
  • Chamber(s) of Commerce
  • Chamber(s) of Trade
  • Charter
  • Chartered
  • Chemist
  • Chemistry
  • Co-operative
  • Council
  • England
  • English
  • European
  • Federation
  • Foundation
  • Friendly Society
  • Fund
  • Government
  • Great Britain
  • Group
  • Holding
  • HSC (Health and Social Care)
  • HPSS (Health and Personal Social Services)
  • Industrial & Provident Society
  • Institute
  • Institution
  • Insurance
  • Insurer
  • International
  • Ireland
  • Irish
  • National
  • Patent
  • Patentee
  • Post Office
  • Reassurance
  • Reassurer
  • Register
  • Registered
  • Reinsurance
  • Reinsurer
  • Scotland
  • Scottish
  • Sheffield
  • Society
  • Stock Exchange
  • Trade Union
  • Trust
  • United Kingdom
  • Wales
  • Welsh

If you have any doubts about your choice of company name, consult Companies House where you can check the index of Company Names. You can also consult the Trade Marks Register of the UK Intellectual Property Office at www.ipo.gov.uk.

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Published on: October 11, 2010

Choosing the type of limited company to form

Lawpack on May 12, 2020

Limited companies exist as a legal entity in their own right, so the limited company’s finances are separate from the personal finances of their business owners.

Shareholders can be individuals or other companies. They’re not responsible for the limited company’s debts, unless they have given guarantees (of a bank loan, for example). But they may lose the money they have invested in the limited company if it fails.

Here’s a breakdown of private limited companies and public limited companies:

Limited company #1: Limited company by shares

A limited company by shares is the most well known type of limited company and is commonly used for a small business. The limited company issues shares and the profits can be distributed to shareholders as a dividend.

The shareholder’s liability in a limited company by shares is limited to the nominal value of the shares held by the shareholder. If the shareholder agrees to pay more than the nominal value, their liability is for that greater sum. Provided that the limited company is successful, the value of the shares should increase but if the limited company goes into liquidation, the shareholder can lose this investment.

Find out more on how to form a limited company by shares.

Limited company #2: Limited company by guarantee

A limited company by guarantee is usually used by “not for profit” organisations, such as clubs or charities. A limited company by guarantee doesn’t issue shares and profits are not distributed to the members.

The member’s liability in a limited company by guarantee is limited to an amount the member has personally guaranteed to contribute to the assets of the limited company if it’s wound up, and this guarantee also applies for a period of one year after membership has ceased.

Limited company #3: Public limited company

The shareholder’s liability in the PLC will be limited to the nominal value of the shares held by the shareholder. If the shareholder has agreed to pay more than the nominal value, the liability is for that greater sum.

When the public limited company is first incorporated, the PLC’s name and Memorandum of Association must specify that it’s a public limited company. The statutory rules which a public limited company must comply with are stricter than those which apply to private companies.

Changes to health and safety law in October 2014

Lawpack on May 12, 2020

As of 1 October the following three health and safety laws have been introduced by the Health & Safety Executive (HSE):

1. Acetylene Safety (England & Wales & Scotland) Regulations 2014

The HSE has consolidated several existing regulations into one to simplify and modernise the rules regarding the use of acetylene. There are various changes but the main ones are as follows:

  • Businesses don’t now need to get approval from the HSE for certain acetylene equipment, as long as they comply with all of the current recognised standards.
  • Businesses or people wanting to manufacture, compress or fill a cylinder with acetylene gas greater than 0.62 bar must now hold a licence.

More information

2. Petroleum (Consolidation) Regulations 2014

The new Petroleum (Consolidation) Regulations 2014 don’t change existing health and safety responsibilities but replace the licensing regime with a certification scheme.

The regulations apply to:

  • Workplaces that store petrol and dispense it through manual or electrical pumping from a storage tank (retail and non-retail)
  • Storage of petrol at non-workplace premises (e.g. private homes, clubs, etc.)

The certificate will be issued by the local Petroleum Enforcement Authority (PEA). Once the certificate is issued it cannot be revoked, but it may become invalid if a prescribed material change takes place or if petrol isn’t stored at the site for a continuous period exceeding 12 months.

All existing licences will remain valid until their date expires when they will be converted to a storage certificate, as long as the storage conditions remain unchanged.

More information

3. Explosives Regulations 2014

The new Explosives Regulations simplify and consolidate the law into one regulation. They cover  workers’ safety and members of the public when they are manufacturing, handling and storing explosives. The main changes are as follows:

  • Local authorities can now issue licences for up to five years.
  • Licensing has been extended regarding the storage of ammonium nitrate blasting intermediate (ANBI).
  • The laws have been updated regarding the exceptions for keeping higher hazard and desensitised explosives without a licence.
  • The tables of  separation distances have been restructured to better allow for sites with more than one store. The tables have also been revised to cover quantities of explosives greater than 2000kg.
  • The list of explosives that can be obtained, or obtained and kept, without an explosives certificate from the police.
  • The revocation of the Fireworks Act 1951, as it has been superseded by the Pyrotechnic (Safety) Regulations 2010.

More information

Published on: October 17, 2014

Business advice vital for firms in difficulty

Lawpack on May 12, 2020

It is essential for companies to seek business advice if they find themselves in financial difficulty, Frances Coulson, president of insolvency trade body R3 has emphasised.

She explained that burying heads in the sand is not an option when the future of a business is at stake.

“The first stages of recovery are the most difficult time for businesses; it takes time before a return to growth translates into tangible relief for business owners,” she highlighted.

Ms Coulson pointed out that as soon as there are signs of growth, creditors often become more aggressive in their pursuit of anyone who owes them money.

Last month, R3 revealed that a record number of individuals are currently in financial distress, with eight million individuals expected to go into their overdraft.

Two million expect to end up in an unauthorised overdraft position, while five million have concerns over the security of their job.

 

Published on: July 28, 2011

Bosses urged to inspire employee engagement

Lawpack on May 12, 2020

Employers running a business wanting to make their employees more engaged have been offered business advice by one expert, who suggested ways of making people more inspired to work.

Ashley Ward, director at European Leaders, highlighted that offering workers free pizza and cans of Coke is not the right way to go about things.

Instead he emphasised that employees need to feel a part of a wider strategy and involved in what a company is trying to do.

“What that releases in your workforce is a level of energy and diligence, which is very different from the fear-driven command-and-control type of structure,” Mr Ward commented.

He pointed out that all the companies who are considered good to work for take this sort of approach, so other firms are therefore encouraged to follow suit.

Almost 6.5 million (23 per cent) of UK employees are looking to change employer in the next year, findings from the GfK International Employee Engagement Study show.

Published on: July 8, 2011

Six steps to setting up your home office

Lawpack on May 12, 2020

Thinking of going self-employed? Want to work from home? Hugh Williams, author of our guide Working from Home, is a self-employed accountant who works from home.

Here are his tips on what you need to do when setting up your home office.

Working from Home Tip #1: Mortgage

If you’re a homeowner with a mortgage, check with your lender that there is nothing in your mortgage agreement that prevents you from working from home; there may be some regulations you need to meet; likewise if you’re a tenant.

It’s possible that your mortgage lender may prevent you from working from home, say if you’re developing a business that radically affects the approach to, the look of or use of your home.

Indeed, if your home-based business increases the risk of damage to your home, such as a greater risk of fire, this may also impinge on the mortgage agreement. So, check all the legal documents relating to the mortgage.

Working from Home Tip #2: Household insurance

Check your household insurance. Are there any clauses relating to working from home? Do you need to increase your cover for business equipment or stock? If you intend to have customers visiting your home office, there are health and safety considerations.

As you work from home, your insurers may require an additional premium on your current insurance and they may ask you to make changes to your home for safety reasons.

Working from Home Tip #3: Risk assessment

Even if you’re self-employed, working from home and with no employees, you’re still affected by health and safety regulations. For the most part, health and safety regulations are common sense because it has to be a good idea when working from home for you to work in a safe environment, both for your benefit and for those who live in the same building. Also, showing that your business has sound health and safety procedures may assist you in getting competitive insurance premiums.

Health and safety law requires you to protect the health, safety and welfare of others, whether they are employees or not. This may include visitors to your home, as well as other people in your household who may be affected.

To comply with health and safety regulations when working from home, carry out a risk assessment to identify hazards and assess risks. Doing a risk assessment is a straightforward practice and you can get full guidance with Lawpack’s Risk Assessment Kit or from our book Health & Safety at Work – the Essentials, which tells you how to assess your home office for health and safety issues.

Working from Home Tip #4: Planning permission

Another factor that you may have to consider is one of planning permission. If working from home affects your neighbours or the residential area (e.g. your home office will create noise, a number of visitors and increased traffic, or you need extra parking spaces), then you need to discuss this with your local authority.

You may need to apply for planning permission from your local council if your home-based business changes the use of a building. The general rule is that if you are using less than half your home as office space, you don’t need to apply for planning permission, but if what you do is noisy or somehow adversely affects your neighbours (e.g. your activity creates pollution or makes parking difficult for them), then no matter how small the business is, you will almost certainly need permission to carry it out.

Working from Home Tip #5: Dedicated space

When working from home it’s really important to keep your business life separate from your home life. Arrange for a dedicated area where you can work from home; a spare bedroom is ideal as a home office. Avoid working from the kitchen table or dining room. If you have to share your workspace with your family, ensure that at the end of the day your work activities are filed away, out of sight.

Working from Home Tip #6: Separate telephone line

Install a business telephone line in your home office. Firstly, it enables you to keep business calls separate from personal calls and therefore makes it easier for you to claim tax relief on business telephone costs. Secondly, it avoids any younger members of the family using the phone during the business day.

More tips on raising finance, making a business plan, keeping accounts and saving tax can be found in our book Working from Home. Plus you can access an expert Guidance Manual outlining how you can find home-based work or convince your boss to work from home with our Working from Home Starter Kit, which includes various working from home forms, including a Health and Safety Checklist.

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Related Products:

  • Working from Home Guide
  • Working from Home Starter Kit

Published on: January 11, 2011

What are your health and safety obligations in the workplace?

Lawpack on May 12, 2020

by Sarah Ashcroft

Failure to excel in health and safety in the workplace has the potential to land a company in trouble, so it should remain a priority for every boss in the country.

Health and safety law

The Health and Safety at Work etc. Act 1974 is the main piece of legislation in the UK that covers the subject and any business that fails to adhere to its rules and regulations can find themselves facing prosecution and substantial penalties.

Fire safety

All manner of issues are covered within the legislation, such as fire safety. Any person who is an employer or property owner has a responsibility to meet certain fire regulations, which means carrying out thorough assessments on a regular basis.

Emergencies

Bosses must also tell staff about the risks they have identified and put measures in place to deal with them. Planning for an emergency is key, as one could occur at any time and being able to overcome any threat is a must.

Heavy machinery

Agriculture is one of the areas in which many accidents occur, but any company that operates heavy machinery can, in fact, be in danger, so following the government’s guidelines is a must.

Carrying out risk assessments and setting standards that must be reached by staff at all times is a good starting point, while completing regular inspections of machinery will also help to keep it in working order.

Workplace temperature

It’s not all about serious injuries and potentially disastrous occurrences though, as even fairly basic issues are covered by legislation and the government demands that these are followed.

For example, employers should make sure that their workplace is of the correct temperature for employees, with a minimum of 16 degrees C (or 13 degrees C where manual work is being completed) advised.

Noise

On a similar level, noise at work levels must also be controlled so that employees are not forced to operate in conditions that could damage their hearing in the long run.

A general duty of care exists at all times so employers must always be thinking about how they could be reasonably expected to protect their workforce, explains the Royal Society for the Prevention of Accidents.

Risks

Tackling risks at their source should also be a key consideration. Rather than reacting to an accident – which could land a company in trouble if it hasn’t acted upon health and safety requirements placed on it – the smartest and most considerate organisations will detect potential problems long before they manifest themselves and take adequate precautions.

Training

While plenty of attention is sure to be placed on putting measures in place that can prevent accidents and injuries, it’s wise to invest in training and supervision as these can have a similar effect.

Co-operation

Companies should promote a feeling of cooperation between staff. After all, people working well together and acting to keep each other safe can help to ensure that this is a reality.

Hazardous materials

Another area to watch out for is hazardous materials, and any company that works with these – whether it’s dust, fumes, radiation or toxic substances – should make sure that they are controlled at all times.ADNFCR-1645-ID-801685715-ADNFCR

More information

For more information on the health and safety requirements employers must comply with, read Lawpack’s Health and Safety at Work Essentials. Written by an expert in the law, it’s the one-stop guide for all you need to know.

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Published on: January 23, 2014

Employment law changes 2015

Lawpack on May 12, 2020

The eight employment law changes employers need to be aware of this year:

1. Introduction of shared parental leave

From 1 December 2014 couples who have a baby due – or a child placed for adoption – on or after 5 April 2015 will be able to share the mother’s maternity leave and, if available, maternity pay.

More information

2. Changes to statutory adoption pay and leave

As of 5 April 2015 the qualifying period of 26 weeks for an employee to be eligible for adoption leave will be removed.

Statutory adoption pay (SAP) will be put in line with statutory maternity pay, with it being set at 90% of average weekly earnings for the first six weeks.

Surrogate parents will also be eligible for adoption leave, where the child’s expected week of birth begins on or after 5 April 2015.

More information

3. Right to take time off to go to adoption appointments

From 5 April 2015 the main adopter will be entitled to take time off to attend up to five appointments, and the secondary adopter up to two.

More information

4. Parental leave age limit of children extended

Parental leave is a parent’s right to take unpaid leave which can be used before the child reaches the age of five.

From 5 April 2015 the age limit of the child will increase to 18 years’ old and parents who have sufficient qualifying service will be able to take 18 weeks’ unpaid leave.

Parental leave isn’t connected to shared parental leave.

More information

5. Introduction of Fit for Work Service in England & Wales

From April 2015 the government is introducing a new Fit for Work Service, which offers a health and work assessment and advisory service to employees who have been off work due to sickness for four weeks or more.

In England & Wales these employees will be offered access to free occupational assistance.

If employees are recommended medical treatment under the new scheme, employers will be able to claim up to £500 tax relief on the payments on such treatment.

More information

6. Restrictions removed on defined-contribution pension schemes

From April 2015 certain restrictions will be removed on how individuals can draw their benefits from their defined-contribution pensions after the age of 55.

paternity pay, statutory maternity pay and adoption pay

All rates are increasing from 5 April 2015.

More information

8. Rate increase of statutory sick pay

As of 5 April 2015 the rate of SSP is increasing to £88.45 per week.

More information

Published on: January 20, 2015

Employers must include overtime in holiday pay

Lawpack on May 12, 2020

Following a recent Employment Appeal Tribunal ruling around five million employees could be eligible for backdated holiday pay after it was found that employers should include overtime when calculating holiday pay.

The tribunal ruled on three cases — Bear Scotland v Fulton, Amec v Law and Hertel v Wood  — and found that employers shouldn’t take into account basic pay only when calculating how much their staff should be paid while on holiday.

The decision was made because in two of the cases employees had worked overtime consistently, but it hadn’t been included in their holiday pay so they had received “considerably less” pay when they were on holiday in contrast to when they were at work.

Employment lawyers have told employers, however, not to worry that they will be making massive payouts. Lisa Bryson, from A&L Goodbody, has said that business owners must take a measured approach:

“To a degree, it’s actually welcome news to employers because the ruling was that any underpayment of holiday that occurred more than three months ago wouldn’t be counted, so that appeared to limit the potential financial exposure.”

In fact, any claims from employees must be made within three months of the deduction or three months of the last of a series of unlawful deductions. The ruling also stated that the extra eight days of holiday staff are due will not be included.

However, this ruling isn’t the end of the matter, as the right to appeal has been granted and it’s expected that it will be pursued in the future.

Other information

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Published on: November 17, 2014