How to Register UK Limited Liability Company?
Business activities in the UK are regulated by well-thought-out corporate legislation. If a businessperson does not know UK laws, they could waste a lot of time, effort and money. That is why it is so important to choose the right legal form of business from the onset. It must correspond to your goals and challenges.
What Is Private Limited Company (LTD)?
A UK private limited company (LTD) is one of the most common incorporation forms for registering small and medium-sized businesses in the UK.
Why do most people prefer it?
- First, an LTD is a completely independent entity that exists separate from its shareholders. LTD can conclude contracts, buy movable and immovable property, take out loans, etc; Shareholders of an LTD are only liable up to the amount of their investment or the amount of the provided guarantee;
- Secondly, an LTD registered in the UK is not tax-transparent wherever its business activities are carried out;
- Thirdly, a limited company registered in the UK does not require a lot of time and money from prospective entrepreneurs. Moreover, it can be done remotely and there is no need to visit the country to register a company.
What Is Difference between Companies Limited by Shares and Limited by Guarantee?
Let’s start with a company limited by shares.
- This type of company is set up to generate profit;
- Companies limited by shares are suitable for registration of small and medium-sized businesses in the UK;
- A company is legally separated from its directors; its capital is separated from the founders’ own money;
- The share capital of a company is divided into shares owned by the shareholders;
- Shareholders in an LTD are only liable up to the amount of their investment;
- The profit left after tax remains at the disposal of the LTD and is often distributed among the shareholders.
Let’s have a look now at a company limited by guarantee.
- Such a company is usually set up by non-profit and charitable organisations;
- A company limited by guarantee has guarantors;
- The guarantor’s liability for the results of the company is limited to a certain amount of money, which is called a guarantee;
- A UK company limited by guarantee is legally separate from its directors, and its finances are separate from the guarantors’ own money;
- The profit of companies limited by guarantee is usually reinvested rather than distributed among the founders.
If you’re convinced that a UK limited company is the most suitable form for your business organisation, the next step is to find a name for it.
How to Choose Name for Private Limited Company
A UK company name should:
- Be unique, i.e. its name cannot be the same as another registered company’s name or trademark;
- Avoid being misleading. It is forbidden to use words referring to the Government, local authorities, or government licence if there are no valid grounds for it;
- Avoid offensive and discriminatory words;
- Must contain an indication of the legal form at the end of the name (either ‘Limited’ or ‘Ltd’). You can include the Welsh equivalents ‘Cyfyngedig’ and ‘Cyf’ instead if you registered a company in Wales.
How to make sure you can use an LTD company name? You can check the availability of the name through a WebCheck service on the Companies House website and in the online trade marks journal to see if it matches any registered trade mark.
Appointing Director of Limited Liability Company (LTD)
A UK limited company must have at least one director. The director is legally responsible for running the company, filing annual accounts and submitting statutory reports.
An individual must be at least 16 years old to be a director of a UK limited company. A director cannot be disqualified from being a director or have an active bankruptcy within a year before incorporation. A director does not need to be a UK resident, but the company must have a registered office in the UK. It is possible to be a shareholder and director of a UK private limited company.
Shares and Guarantees of LTD
You will need to provide a statement of capital to register your limited company in the UK, including the following information:
- Amount of shares issued by the company and their total value;
- Names and residential addresses of all shareholders of the company, also known as founders.
A UK private limited company must have at least one shareholder who can be a director at the same time. If you are the only shareholder, you own 100% of the company. The number of shareholders of a UK LTD is not limited, as well as the amount of capital.
If a company’s liability is limited by guarantee, it is necessary to find at least one guarantor and determine the exact amount of the guarantee.
People with Significant Control (PSCs)
It includes individuals and, in rare cases, legal entities who own and control a company. These people are sometimes called “beneficial owners”. Therefore, if a non-UK registered entity becomes a shareholder of a UK private limited company, it is necessary to go through the entire chain of ownership to determine the person with significant control. Information about people with significant control is recorded on the public register at Companies House.
Articles of Association and Shareholders’ Agreement of Private Limited Company
It is not compulsory to have a shareholders’ agreement. However, if a limited company has more than one shareholder, you can draw up a shareholders’ agreement. It is not necessary to formally register such an agreement; sending a copy of the agreement to Companies House is enough.
If you register your LTD company, you will be offered to use standard Articles of Association, a sample of which is published on the Companies House website. If you need to amend the standard Articles of Association or use your own template for any reason, you must send a hard copy of the Articles of Association to Companies House during incorporation or when such amendments to the Articles of Association are made.
Registered Address of LTD
You need to include the address of the registered office in the UK to incorporate a limited company. There are the following requirements for the registered address:
- It must be a physical address in the UK. You can use a PO Box but it must still be a physical address with a postcode;
- The registered office address must be in the same UK region where your LTD company is registered.
Register LTD Company in UK with Help of Imperial & Legal
The UK has simplified the process of registering a company and running a business in the UK; nevertheless, it’s still a lot to deal with for a start-up entrepreneur.
If you have no business experience in the UK, contact Imperial & Legal based in London for legal advice. We offer three incorporation packages for UK entrepreneurs from the minimal “Standard” package, which includes the registration of a private limited company and secretary services, to the comprehensive “Imperial” package, which solves such challenging issues as opening a bank account or visa support for two employees of your company.
