When you choose to form a limited company in the UK, via a companies house or a company formation agent, there are a number of requirements that you will need to meet. These requirements include choosing at least one company director and issues shares to shareholders. While these can seem like confusing tasks, they are quite simple and can be done relatively quickly once you have determined the legal structure that your business will hold.
If you are setting up any type of limited company, you will be required to appoint at least one company director. You can have as many directors as you want, but you must have at least one. Company directors are responsible for managing the company on a daily basis. Basically, anyone can be a company director as long as they are at least 16 years of age. They cannot have been disqualified as director by a court order and are not permitted to be in an undischarged bankrupt. Other than those requirements, you can name anyone you want as company director.
You should note that your director does not necessarily have to be a resident of the UK. Once you have chosen and appointed your director or directors, you are required to submit certain information about your company director to Companies House. You need to provide for each director, the name and address. If your director is a corporate body, which is common in many public limited companies, you will be required to submit the first and last name of the authorized person acting as director, as well as the registration number and location of registration. There is other information that is required if your appointed director is not a UK resident.
Shareholders are those who own companies, also referred to as members of the company. The stake that a shareholder owns in a company will depend on the number of shares of units of ownership that he or she holds. Nearly anyone can be a shareholder in the UK, and this includes individuals, partnerships, corporate bodies, trusts and governments.
The first shareholders in a new company are the subscribers to the memorandum and the articles of association of that company. Theses shareholders or subscribers agree to purchase a specified number of shares that are allocated to them. Basically, there are three different ways that one can become a shareholder in a limited company. He or she can become a subscriber to the memorandum of association that is filed when the new company is formed. Shares can be gifted to other members by existing shareholders or shareholders can subscribe to new issues of shares that are offered by the company.
Companies House requires certain information to be submitted regarding shareholders. First and last name as well as the full postal address should be submitted when shares are purchased by new members. This is generally done during the registration phase for new companies that are being formed. Should you decide to form a limited company as opposed to a sole trader company, you will need to familiarize yourself with the requirements for company directors and shareholders.