3.2 Incorporation, Constitutions and Companies House

Formation is where personality is switched on — or, for a 1890 Act partnership, where it is not. A newly qualified solicitor who treats "we've agreed to go into business" as the same event as "the registrar has issued a certificate" will mis-identify the contracting party and miss criminal and civil consequences of trading too early. This section covers the procedures and documents needed to incorporate a company, form a partnership, or form an LLP, the constitutional documents, Companies House filings, and the other steps required before the entity can lawfully and practically commence operating. Listing, prospectus, and DTR rules remain outside FLK1 and outside this chapter.

Incorporating a company under the Companies Act 2006

Section 7 allows one or more persons to form a company by complying with the registration requirements. The subscribers subscribe their names to a memorandum of association (s.8): they state that they wish to form a company under the Act and agree to become members, and, if the company is to have a share capital, to take at least one share each. Since 2006 the memorandum is a formation artefact, not a continuing objects clause. Objects are unrestricted unless the articles restrict them (s.31).

The application for registration (s.9) is the practical IN01 pack. It states the company's proposed name, whether the registered office is to be in England and Wales, Wales, Scotland, or Northern Ireland, whether the company is limited and whether it is private or public, and the intended address of the registered office. It is accompanied by a statement of capital and initial shareholdings (for a share company), a statement of proposed officers (s.12), a statement of initial significant control (the people with significant control / PSC regime in Part 21A), and a statement of compliance (s.13). A registration fee is payable. The registrar issues a certificate of incorporation (s.15). From the date of that certificate the company is capable of exercising its functions, the subscribers become members, and the proposed directors take office (s.16). The certificate is conclusive evidence that the requirements of the Act as to registration have been complied with and that the company is duly registered (s.15(4)). Clients who "started trading last month and will incorporate next week" did not have a company last month.

Name rules matter at the door of the registrar: a limited company must use Ltd or Limited (or Welsh equivalents); a public company must use plc or public limited company (ss.58–59). The registrar will refuse a name that is the same as an existing name on the index, and certain sensitive words need approval (Part 5). That is still company law, not an FCA listing analysis.

Constitutional documents

Every company must have articles of association (s.18). If the applicants do not register bespoke articles, the model articles prescribed for that type of company apply by default (s.20) — currently the Companies (Model Articles) Regulations 2008, with separate models for private companies limited by shares, private companies limited by guarantee, and public companies. Articles may be amended by special resolution (s.21), subject to any entrenched provisions (s.22) and to class-rights protections if a change varies a class (s.630). Section 33 deems the constitution to bind the company and its members as if they had covenanted to observe it. That statutory contract is enforceable by members as members; it is not a free-standing employment contract for a director who happens also to be a shareholder.

A shareholders' agreement is extra-constitutional. It is private, usually not filed, and can regulate reserved matters, leaver provisions, and deadlock. It does not replace the articles and cannot authorise the company to ignore the Act. Advise both: articles that Companies House and third parties can see, and a shareholders' agreement that governs the relationship the members actually want.

Companies House filings after day one

Incorporation is not the last filing. A company must keep the public record true. The confirmation statement (s.853A) confirms that the information on the register is up to date, at least once in every 12-month review period. Accounts must be filed (s.441) within the period allowed by s.442 — typically nine months after the end of the relevant accounting reference period for a private company and six months for a public company. Changes of director are notified (appointment, change of details, termination). A change of registered office (s.87) takes effect when it is registered. Allotments of shares are notified (s.555 / form SH01). Charges created by the company must be delivered for registration within 21 days beginning with the day after the date of creation (s.859A); an unregistered charge is void against a liquidator, administrator, and creditors, though still valid against the company. Special resolutions and certain other resolutions must be filed (ss.29–30). PSC changes must be entered in the company's PSC register and notified.

Failure is not a paperwork shrug. Late filing of accounts attracts a civil penalty. Persistent failure to keep the register accurate is a criminal offence for the company and every officer in default, and it is a fast route to strike-off. Advise the client who will own the filing calendar: a named director, the company secretary if there is one, or a reliable agent.

Public companies: extra steps before trading

A company may be incorporated as a public company, but it must not do business or exercise any borrowing powers unless the registrar has issued a trading certificate under s.761. The registrar must be satisfied that the allotted share capital is not less than the authorised minimum. If a public company transacts in breach of s.761, the transaction remains valid, but if the company fails to comply with its obligations within 21 days of being called on to do so, the directors at the time of the transaction are jointly and severally liable to indemnify the other party for resulting loss (s.767). There is also a criminal offence. Private companies have no equivalent trading-certificate gate: they may commence business from incorporation, subject to licences, tax, and contract.

Minimum officer rules travel with the public/private choice: a public company needs at least two directors and a company secretary (ss.154, 271). A private company needs at least one director (a natural person) and need not have a secretary (ss.154–155, 270).

Forming a partnership or an LLP

A 1890 Act partnership can arise by conduct. There is no Companies House incorporation and no certificate that "creates" the firm. A written partnership agreement is still the advice you give every time: it varies the default rules in ss.19 and 24, records capital, and reduces the chance of an accidental partnership with a profit-sharing consultant. Practical start-up steps still exist: a bank mandate, professional indemnity insurance, HMRC registration, any sector licence, and business-name disclosures where the firm does not trade under the partners' surnames.

An LLP is formed only by incorporation (Limited Liability Partnerships Act 2000, s.2). Two or more persons associated for carrying on a lawful business with a view to profit subscribe their names to an incorporation document (the LL IN01 pack): name, registered office, members, and designated members. The registrar issues a certificate. From that date the LLP is a body corporate. The LLP agreement is not filed. If the members never sign one, the default provisions in the Limited Liability Partnerships Regulations 2001 (including regulations 7 and 8) fill the gap — equal shares, management participation, majority decisions on ordinary matters, unanimity to change the nature of the business or to admit a member, and no expulsion without agreement.

Other steps so the entity can commence operating

The certificate is necessary for a company or LLP; it is not sufficient to open the shop. Functioning-knowledge advice includes:

• Statutory registers: members, directors, directors' residential addresses (protected), secretaries, and PSCs, unless a central-register election applies.
• Trading disclosures: company name on business premises, websites, and order documents; company number, registered-office address, and place of registration on letters and websites (s.82 and the 2015 names and trading disclosures regulations).
• Share certificates and entry on the register of members as evidence of title (ss.768–772).
• Bank account and mandates in the entity's name — a personal account labelled with a trading name is how sole traders accidentally mingle funds, and how pre-incorporation clients create s.51 exposure.
• Tax: notify HMRC for corporation tax (a company is within the charge from incorporation), PAYE if there are employees, and VAT if the taxable-supplies threshold is reached or registration is desirable.
• Insurance: employers' liability where there are employees; professional indemnity for many practices; public liability as a commercial essential.
• Sector licences and SRA or other professional authorisations where the business is a reserved or regulated activity.
• Directors' service contracts and workplace policies — employment law sits nearby, but the corporate step is to record who can sign and who is an employee.

Mini-scenario

A client emails: "Four of us will trade as Northshore Architects Ltd from Monday; please incorporate when you can." You do not bless Monday's client meetings as company meetings. Until the certificate is issued, there is no Ltd. Anyone who signs a client appointment purporting to bind the company risks s.51 personal liability. After incorporation, a plc version of the same plan still cannot borrow or trade until the s.761 certificate is in hand. That sequencing is the job.