Forming a limited company

The provisions relating to company formation are contained in Parts 1 to 7.

Types of company

The following legal entities may be formed, trade as a company and are subject to this legislation:

  1. Limited company - where shareholder liability is limited to any the share capital
  2. Unlimited company - where there is no liability on members
  3. Public company - is a company whose certificate of incorporation states that it is a public company and in relation to which the requirements of the 2006 Act, or the former Companies Acts, so far as registration or re-registration as a public company have been complied with.
  4. Private company - is any company that is not a public company
  5. Company limited by guarantee and having share capital
  6. Community interest company

The following information in the required format is required to be submitted to the registrar in the appropriate jurisdiction - England and Wales, Scotland or Northern Ireland:

The memorandum of association together with an application for registration of the company. The application must state:

  • The companies' proposed name
  • The situation of the country in which the registered office is to be situated
  • Whether member liability is limited, and if so whether by shares or guarantee
  • In the case of a company that is to have a share capital, a statement of capital and initial shareholdings
  • In the case of a company limited by guarantee, a statement of guarantee
  • A statement of the company's proposed officers
  • The registered office address
  • A statement of compliance that the requirements of the Act have been complied with.

Subject to the registrar's satisfaction, a signed certificate of registration will be issued.

Power of directors to bind the company

In favour of a person dealing with a company in good faith, the power of the directors to bind the company, or authorise others to do so, is deemed to be free of any limitation under the company's constitution. For this purpose:

  • a person 'deals with' a company if he is a party to any transaction or other act to which the company is a party
  • a person dealing with a company, is not bound to enquire as to any limitation on the powers of the directors to bind the company or authorise others to do so, is presumed to have acted in good faith unless the contrary is proved, and is not to be regarded as acting in bad faith by reason only of his knowing that an act is beyond the powers of the directors under the company's constitution.

Please refer here for further information regarding:

  • Constitutional limitations: transactions involving directors or their associates
  • Constitutional limitations: companies that are charities

Formalities of doing business under the law of England and Wales or Northern Ireland:

  • Company contracts
  • Execution of documents
  • Common seal
  • Execution of deeds
  • Execution of deeds or other documents by attorney

Formalities of doing business under the law of Scotland:

  • Execution of documents by companies
  • Official seal for share certificates etc
  • Pre-incorporation contracts, deeds and obligations
  • Bills of exchange and promissory notes

Forming a limited company