Forming a Company – Considerations

One of the first things to consider when forming a company is what type of company/entity you need.

The CA 2006 provides for three types of company (s3):

  • Â Company limited by shares
  • Â Company limited by guarantee
  • Â Unlimited company.

More often than not you will be looking at a company limited by shares, they can be either private or public companies whereas a company limited by guarantee or an unlimited company can only be incorporated as private companies.

A company is registered by filing the required documents and paying the fee to Companies House. When this is done the Registrar of Companies will issue a certificate of incorporation.

When starting a company you have two options: 1) create a tailor made company or 2) buy a shelf company, that is a company that has been incorporate but has not traded.

Under the CA 2006 the role of the memorandum of association has diminished, all this document now sets out is that the subscribers have agreed to become members, that it is to have a share capital and that they take at least one share each (s8). The memorandum must be in the prescribed form and must be executed by each subscriber.

The articles of association will now become even more important. There are still model articles which will depend upon the type of company formed however many companies will still opt for bespoke articles. The articles themselves are the company’s internal rules.

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