ENGLAND & WALES Law and Practice Contributed by: James Ross, Paolo Palmigiano, Debbie Cloake, Helen Farr, Debbie Heywood and Louise Popple, Winston Taylor
Private Limited Companies A UK private limited company is typically governed by one or more directors and operates in accordance with its Articles of Association, as prescribed by the Companies Act 2006 (CA2006). The liability of share - holders is limited, meaning that their financial respon - sibility for company debts does not exceed the unpaid amount on their shares. A private limited company does not have a minimum share capital requirement, though it must always have at least one share in issue, and there must always be at least one shareholder. These companies are best suited to SMEs and are particularly appropriate for family businesses, start-ups and businesses seeking to keep their affairs private from public scrutiny. Public Limited Companies A UK PLC is governed by the CA2006. Many PLCs are admitted on a stock market, typically the London Stock Exchange or the AIM Market, which will mean an additional regulatory framework applies (depend - ing on the relevant market). A PLC must appoint at least two directors and a qualified company secretary. It is managed by a board of directors and is subject to more stringent regulations than a private limited com - pany. A PLC must have a minimum of two sharehold - ers, and shareholders’ liability is limited to the amount that remains unpaid on the shares they hold. The mini - mum share capital threshold for a PLC is GBP50,000, with at least 25% of the nominal capital (and the whole of any premium) being paid up in cash upon incorpo - ration. This type of entity is suitable for larger ventures looking to attract investment from public markets – being able to raise capital through equity offerings and sell shares to the public offers substantial opportuni - ties for growth and expansion, making it an attractive option for businesses with ambitious scaling plans. Some companies may start as private companies lim - ited by shares and re-register as a PLC later, perhaps because they are looking to list on a public market. Limited Liability Partnerships An LLP is a type of corporate vehicle that merges the flexibility of a partnership (as it is taxed as a partner - ship) with the benefits of limited liability for its mem - bers. The governance structure of an LLP is admin -
istered directly by its members, usually pursuant to an LLP agreement, which sets out each member’s responsibilities, obligations and share of profits. Members of an LLP enjoy limited liability protection – their personal exposure for the debts incurred by the LLP does not extend beyond their individual invest - ments into the LLP unless they engage in wrongdoing or personal negligence. There are no statutory rules regarding minimum capital contributions in an LLP, but an LLP must always have at least two members. In the UK, LLPs are particularly favoured by professional services firms, including law practices and account - ants. 3.2 Incorporation Process The steps and timing for the incorporation of enti - ties in the UK depend on the type of entity that has been chosen. All private limited companies, PLCs and LLPs must be registered at Companies House, the UK’s registrar of companies, which operates under the CA2006. Online registration with Companies House is typically processed within 24 hours, while postal applications may take 8–10 days. A fee is payable. The information required for each is as follows. • Limited companies: (a) name – an appropriate company name that conforms with Companies House regulations must be chosen; (b) documentation – the necessary documents, including the memorandum of association and articles of association, must be prepared; (c) identity verification – all proposed directors who are individuals must verify their identity (using one of the Companies House-approved routes) prior to incorporation (if they have not done so already for another entity) and provide their personal code as proof; (d) forms – Form IN01 must be completed, with details including the registered office, email ad - dress, principal business activities, director(s), secretary (if any), shareholder(s), person(s) with significant control, share capital and confirma - tion of lawful purpose; and (e) registration – once the application has been processed by Companies House, a certificate of incorporation will be received confirming the
333 CHAMBERS.COM
Powered by FlippingBook