Why do people register limited companies?
Registering a limited company, also referred to as forming a limited company, is legally known as
"incorporation" and can be done for a new or an existing business. It is a legal entity with
a separate identity and finances from those who own or run it.
The owners and directors will not be personally liable for any liability of the company beyond the amount
that they have put in or owe as share capital – hence the term "limited", abbreviated to "ltd".
People set up companies mainly to protect their personal assets as well as doing so for commercial,
legal and taxation reasons.
A business cannot operate as a limited company until it has been registered at Companies House under the
framework of the Companies Act 2006. Establishing your business as a company means the directors are
required to file certain documents every year such as annual accounts and an annual return.
They must also inform Companies House about any changes, such as the appointment or resignation of
directors or a change to the registered office.
You should always seek professional advice, ideally from an accountant before deciding whether
incorporation is the best format for your business.
Who can register a limited company?
One or more people can form a limited company for any lawful purpose by subscribing their names to a
memorandum of association, which is the company’s constitution and completing the relevant forms.
This is their agreement to form the company. The definition of a ‘person’ includes individuals,
companies and other bodies.
How many types of company are there?
Private company limited by shares: This has a share capital and the liability of each
member is limited to the amount paid on their shares or owing for their shares. This type of company is
the most common type and is used for most commercial businesses.
Private company limited by guarantee: This does not have a share capital and its members
are guarantors rather than shareholders. The members’ liability is limited to the amount they agree
to contribute to the company’s assets if it is wound up and can be as little as 1 penny.
This type of company is not normally suited for commercial situations and is most commonly used by
charities and other "not for profit" organisations such as clubs.
Private unlimited company: This may or may not have a share capital but there is no limit
to the members’ liability. It is not very commonly used.
Public limited company: This is also referred to as a PLC, has a share capital and limits
the liability of each member to the amount paid or owing on their shares. It may offer its shares for sale
to the general public and may be quoted on the stock exchange. It is not commonly used for small businesses.
Community interest company: This is also referred to as a CIC and is designed for people
who want to carry out activities that are intended to benefit the community. CIC’s are registered as
companies under the Companies Act and regulated by the CIC Regulator.
Flat management company: This is one that has been formed to manage a property divided into
flats. It is common practice in the company’s articles of association that shareholders who sell their
flats must also transfer their shares to the new owners.
Right to manage company: This is one that is limited by guarantee enabling long
leaseholders in blocks of flats to take over the management of their building.
Commonhold associations company: This combines freehold ownership of a single property
(a unit) in a larger development with membership of a limited company that owns and manages the common
parts of the development, for example a block of flats where each flat is a unit and all the other parts,
such as the hallway are commonhold.
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How do I register my company and what is the cost?
You could go directly to Companies House but we do not recommend this. It is best to use a company
formation agent who is a member of ACRA (Association of Company Registration Agents) and can give you advice.
A company formation agent will typically perform the task of regsitering a limited company for around £50
or so including the fees to Companies House and it will be done within 24 hours. Some agents offer a cut
price service, but remember that you get what you pay for and forming a limited company is one of the
biggest decisions many businesspeople will make.
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Can I reserve my proposed name?
Applications to Companies House are dealt with in strict order of their receipt and in general electronic
documents are processed more quickly than paper documents.
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What details do I need to supply to register a limited company?
- the proposed company name
- registered office address
- articles of association
- details of the proposed director(s) and the secretary if it has one
- directors’ service and residential addresses
- a statement of capital and initial shareholdings
- a statement of compliance or guarantee
…don’t forget your credit or debit card if ordering online.
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What is the memorandum of association?
The memorandum of association shows the intention of the initial shareholders, also known as subscribers,
to form a limited company.
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What are the articles of association?
The articles of association are its internal rulebook. Every company is required to have articles, which are
legally binding on the company, its members and the directors.
The articles are flexible instruments and a company formation agent will be able to guide you and answer
any queries you may have. Whilst most companies have standard articles it is important to check that the
articles will achieve what you want and will cater for any specific circumstances pertaining to your
business.
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What are model articles?
This is the default set of articles specified in the legislation and can be used if you do not wish to
submit bespoke articles for your company formation. A formation agent who is a member of ACRA will offer
you bespoke articles as ACRA is of the opinion that the default articles are not the best choice for many
small businesses.
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Can I change the articles later?
After your company is incorporated you may make changes but must notify Companies House every time you do
so, otherwise an offence may be committed.
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What is an entrenchment or restriction in the articles?
You may choose to adopt articles which include provisions or restrictions that can only be changed if
certain conditions are met, such as a lower or higher majority of shareholders than the 75 per cent that
would be required to pass a special resolution.
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What is the registered office?
The registered office is a UK location (in either England & Wales, Scotland or Northern Ireland) where
letters and notices can be delivered to the company, but does not need not be the place where the company
carries on its day-to-day business. It cannot be moved from one of the above localities to another.
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What is the certificate of incorporation?
The certificate of incorporation is proof that the company is duly registered under the Companies Act 2006.
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What is the minimum number of officers a company requires?
The Companies Act 2006 requires a private company to have at least one director, although a company’s
articles of association could impose a higher minimum requirement. At least one director must be an
individual. A private company does not need to have a secretary unless the articles of association require
it.
A public company (plc) must have at least two directors and a secretary. At least one director must be an
individual. The secretary of a plc must be professionally qualified.
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Can anyone be a company director?
The members (ie the shareholders) appoint the directors who will run the company on their behalf. The only
restrictions that prevent anyone becoming a director are:
- being disqualified from acting as a company director
- being an undischarged bankrupt
- being under the age of 16
Anybody who acts in a manner that is similar to a director may be held to be a "shadow director"
and held to account accordingly.
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Does a company secretary need any qualifications?
Not in the case of a private company.
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Do I have to include "limited" in my company name?
Yes, unless you are a private company limited by guarantee.
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Can I choose any name I want for my proposed company?
No. There are a number of restrictions and controls on your choice of company name.
If it is a private company limited by shares or guarantee its name must end with "limited" or
"Ltd". However, if your company’s registered office is stated as being situated in Wales
(a "Welsh" company), its name may instead end with "cyfyngedig" or "cyf".
If it is a plc its name must end with ‘public limited company’ or ‘p.l.c.’.
However, if your company’s registered office is stated as being situated in Wales (a "Welsh" company),
its name may instead end with ‘Cwmni Cyfyngedig Cyhoeddus’ or ‘CCC’
The rules are complex and change from time to time but as a general guide you may not use a name:
- that suggest a connection with HM Government or public body
- includes "sensitive" words and expressions (see below, 19)
- offensive names
- is "the same as" another one, meaning that if two company names are so similar they are
likely to confuse the public as to which company is which (see below, 17)
- is "too like" another one (see below, 21 )
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Here are some examples of what will be regarded as the ‘same as’
When comparing one name with another certain words and expressions will be regarded as the ‘same
as’, for example, "and" and "&", "plus" and "+",
"1" and "one", "6" and "six", "€" and "euro",
"$" and "dollar", "%" and "percent", "@" and "at".
‘Lands Limited’ is the ‘same as’:
- Land-S Limited
- L and S Public Limited Company
- Lands: Ltd
‘Catering Limited’ is the ‘same as’:
- Chambers UK Limited
- Chambers.co.uk PLC
- Chambers International Traders Ltd
- Chambers Company Services Public Limited Company
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Are there any exceptions to the ‘same as’ rules?
Yes. The ‘same as’ rule will not be applied in the following circumstances:
- that the proposed company will be part of the same group as an existing company
- the existing company consents to the registration of the proposed name
- the application to register includes a letter/statement from the existing company which confirms
its consent to the incorporation of the new company name and that it will form part of the same group.
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What are sensitive words and expressions?
These are words and expressions which, when included in a company or business name could:
- suggest business pre-eminence, a particular status, or a specific function
- imply a connection with a government department, devolved administration or, public authority
cause a criminal offence
If any of the above are indicated in your chosen name you will need the approval of the Secretary of State.
These rules are in place to protect the public from being mislead. Companies House administers the approval
process on behalf of the Secretary of State.
Other sensitive words require permission from the relevant body and full details are available at
Companies House of from the formation agent you will be using.
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Could I be required to change my company name after incorporation?
Yes. You could be required to change your company name after incorporation if:
- the name is ‘too like’ an existing name on the index
- misleading information was provided at the time of registration
- the company’s activities are misleading
- the company no longer justifies omitting "Limited" from its name
- the name is too similar to a name in which someone else has goodwill
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What are ‘too like’ names?
In general a name is ‘too like’ an existing name if:
- the differences are so trivial the public are likely to be confused by the simultaneous appearance
of both names on the index; and/or
- the names look and sound the same.
In practice this means that a name will be regarded as being ‘too like’ an existing name if they:
differ by one or two letters or characters, although the length of the names involved will be taken
into account.
For example, European & Asian Facilities Services Limited and European Facilities
Services Limited would be ‘too like’ but JKL Plc & JCG Plc would not.
differ because of punctuation or spacing of letters or words or the order of words.
For example, Bath Drives & Paths Limited & Bath Paths & Drives Limited would be
‘too like’
or look and sound the same.
For example, Logistic Knowhow Limited would be regarded as ‘too like’
Logistix Knowhow Limited.
Names that differ by the inclusion of additional words (as opposed to a few characters) will not be
treated as ‘too like’ regardless of whether the additional word does or does not describe an activity in
detail. For example, there is no difference in the treatment of "traders" or "cartons" in terms of
additional words. However, names that differ only by the inclusion of words that are normally associated
with a name ending such as "company" or "partnership" will be regarded as ‘too like’.
When deciding whether a name is ‘too like’ another we will not consider factors such as:
- trademark infringement;
- disputes between directors;
- trading and business names;
- nature & locality of the activities of the companies;
- arguments over proprietary rights in the name;
- suggestions of passing off;
- suggestion of implied association;
- dormant or non-trading status.
All ‘too like’ objections should be addressed to the ‘Secretary of State’ and delivered to
Companies House in time to allow for any necessary direction to be issued within 12 months of a company’s
incorporation. If a direction is issued to the affected company it will be required to change its name
within 12 weeks of the date of the direction.
The ‘too like’ rules apply to any name which appears on the index of company names which
includes companies, LLPs and other bodies such as Limited Partnerships, overseas companies and
Industrial Provident Societies.
When choosing your proposed name you should check the index to ensure it will not result in an
objection for ‘too like’ which could require you to change your company name. Not all ‘too like’
names result in an objection but you could incur additional costs, for example, new signage, business
stationery and also damage to the goodwill you have gained since incorporation.
Due to the complex and sometimes arbitrary nature of the above there are no guarantees as to the
ability to use a company name.
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How is the rule on misleading information applied?
You could be directed to change your company name within five years of incorporation if misleading
information was provided to enable the name to be registered or if an undertaking or assurance given
to enable the adoption of the name has not been fulfilled.
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What is Opportunistic Registration?
Opportunistic registration is the term applied to a company or LLP which registers a similar name to
one in which another person has goodwill. There is no restriction on who can complain.
Complaints about opportunistic registration are handled by the Company
Names Tribunal (not Companies House) which provides a remedy for parties who are damaged by the
registration of a company or LLP name in which they have a goodwill/reputation. Objections are also based
on the suspicion that the name has been registered in order to extract money or to prevent the aggrieved
party from registering the name.
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What is a Business Name?
This is the name under which someone carries on business other than their own, such as a trading name that
differs form the company’s name as registered at Companies House. In the case of a company or limited
liability partnership, it means a name that is not its registered name.
Business names (as opposed to limited company names) are not registered under the Companies Act.
You should also ensure your business name does not infringe an existing trade mark.
Companies House will not check for this but you may face a legal challenge later on under the rules of
"passing off".
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Where do I get forms and guides?
Companies House supplies all the necessary forms and guidance books although if you are new to
forming a limited company we advise you to seek advice from a company formation agent or an accountant.