The nominal value of the share normally fixes the amount which the shareholder is required to contribute to the assets of the company. One of the results of the doctrine of separate personality is that members of a corporation are not personally liable for corporate debts unless they agree to such liability. In the case of companies registered under the Companies Acts, they are only granted the privilege of incorporation on the basis of their members accepting a limited degree of liability for corporate debts. Section 1(2) of the Companies Act 1985 provides that members' liability is limited to the amount (if any) remaining unpaid on their shares. Shareholders must pay at least the full nominal value of any shares issued to them (i.e., shares must not be issued at a discount s.100).
Where, however, the company issues shares at a premium, i.e., at more than the nominal value of the shares, as is quite common, then the holders of those shares will be liable to pay the amount owed, over and above the nominal value. The excess will still form part of the company's capital but will be included in a distinct share premium account (s.130) and may only be used for limited purposes.
Do you consider there is still a need for the dormant company provisions in Section 250 of the Companies Act 1985. Number of respondents focused on the case of dormant subsidiaries of large groups, who would otherwise be required to file audited accounts. The need to protect company and brand names was also raised here. Do you consider that we should remove t
he requirement for dormant companies to pass a special resolution in order to gain audit exemption? Do you agree that 10% or more of shareholders should be able to demand an audit? Does the requirement for dormant companies to file annual accounts represent fair and proportionate regulation for these companies? Should certain specified payments to Companies House be excluded from the definition of a significant accounting transaction for the purposes of assessing whether dormant status applies? Do you have any views on dormant agent companies?
Companies can be dormant for various reasons, often to protect a company name, in readiness for a future project, or to hold an asset or intellectual property. Some flat management companies whose main purpose is to own the head lease or the freehold of a property choose to become dormant by setting up a residents' association to deal with any expenses.
A company can remain dormant for as long as necessary - indefinitely if, for example, its purpose it just to prevent the name being used by another company. However, there are expenses associated with keeping a company on the register. And, while the company is dormant, various other documents and annual company balance sheets must still be prepared and filed at Companies House. The company will have to decide how expenses will be met and who will run the company and be responsible for ensuring that all the legal requirements are met.
Although a company may be dormant, Companies House must still keep up-to-date information about it on record and make this available to anyone who wants to know about the company. Basically, Companies House needs to know: where to contact the company.
The company's official address is known as its registered office. Who runs the company? That is, particulars about the company officers. Who owns shares in the company - the shareholders (if the company has them). Where certain company registers are kept. What the company's financial year-end is. The company's financial year-end is known as its accounting reference date. What the company's assets and liabilities is - its annual balance sheet. What rules govern the company - its Memorandum and Articles of Association. Most of this information is registered at Companies House when the company is first formed and, if anything changes, you will need to tell Companies House, usually on a special Form. However, every year Companies House will send to the company's registered office a summary of the information held on the public record at Companies House - this Form is called an Annual Return (Form 363s).
This must be completed and returned to Companies House. Also, every year, the company must prepare a balance sheet and send that to Companies House.
This is our most popular package with UK residents, and includes: The submission of forms detailing your company's executive officers The registration of your £1,000 authorised share capital (a minimum of one share must be issued) Company formation is usually achieved within 6-8 workday hours (Companies House permitting) Payment of UK legal and initiation fees The appointment of your own candidates as directors and secretary (a minimum of two people are required) The following documents will be e-mailed to you (Note: these documents are to be printed and signed): Electronic Certificate of Incorporation (PDF) Electronic Memorandum & Articles of Association (MS Word) Minutes of the First Meeting of Directors (MS Word) Share Certificates and company Register
Economy Package
£ 82.00
Annual Maintenance Fee £50.00
This is our most popular package with EU residents, and includes: The submission of forms detailing your company's executive officers The registration of your £1,000 authorised share capital (a minimum of one share must be issued) Company registration is usually achieved within 6-8 workday hours (Companies House permitting) Payment of UK legal and initiation fees The appointment of your own candidates as directors and secretary (a minimum of two people are required) A registered office address for 12 months, provided by Coddan An application form for the following year's renewal of the Registered Office Address service (£50.00) Annual Return and Annual Account reminder The following documents will be e-mailed to you (Note: these documents are to be printed and signed): Electronic Certificate of Incorporation (PDF) Electronic Memorandum & Articles of Association (MS Word) Minutes of the First Meeting of Directors (MS Word) Share Certificates and company Register
Premier Package
£ 131.95
Annual Maintenance Fee £99.95
This is our most popular package with small business, and includes: The submission of forms detailing your company's executive director The registration of your £1,000 authorised share capital (a minimum of one share must be issued) Company incorporation is usually achieved within 6-8 workday hours (Companies House permitting) Payment of UK legal and initiation fees Applicant appointment of director for company (appointed electronically) A registered office address for 12 months, provided by Coddan An application form for the following year's renewal of the Registered Office Address service (£50.00) Nominee company secretary service for 12 months (next year - £49.95) Annual Return and Annual Account reminder The following documents will be posted to you (these documents will be sent via Royal Mail): The original laminated Certificate of Incorporation A bound copy of the Memorandum and Articles of Association The Minutes of the First Directors' Meeting Two printed share certificates and Company Register
Deluxe Package
£ 256.95
Annual Maintenance Fee £224.95
This is our most popular package with overseas residents, and includes: The filing and registration of your company in England The registration of your £1,000 authorized share capital (a minimum of one share must be issued) Company formation is usually achieved within 6-8 workday hours (Companies House permitting) Payment of UK legal and initiation fees A registered office address for 12 months, provided by Coddan An application form for the following year's renewal of the Registered Office Address service (£50.00) Nominee Company secretarial service for 12 months (next year - £49.95) Coddan provides a company nominee director service for 1 year (next year - £125.00) The name of the nominee director & secretary will appear as a public record Annual Return and Annual Account reminder The following documents will be posted to you (these documents will be sent via Royal Mail): The original laminated Certificate of Incorporation A bound copy of the Memorandum and Articles of Association The Minutes of the First Directors' Meeting Two printed share certificates and Company' Register A pre-signed, undated letter of resignation from the nominee director A General Power of Attorney signed by nominee director An indemnity Letter for General Power of Attorney A nominee service agreement which provides for the indemnification of the nominees
Name Protection
£ 22.00
Annual Maintenance Fee £60.00
The purpose of this package: This package allows you to register a company name with Companies House and thus prevent this name being used to form a company by anyone else This package includes: The registration of a non-trading limited company with your choice of name Payment of UK legal and initiation fees A nominee director A nominee secretary A nominee shareholder A registered office address Management of the company: Coddan will file the annual return and dormant company accounts on your behalf for an annual fee of £60.00 If you do not wish to renew the management option at the end of term, the company will be dissolved
Business Start-Up: Legal Requirements
Company subscribers may be residents outside the UK You must appoint a minimum of ONE Director There is no maximum number of Directors Directors can be corporate bodies or private individuals A Director can be of any nationality Directors need not be formally trained All companies must appoint a company Secretary Secretaries can be corporate bodies or private individuals A Secretary can be of any nationality. If there is only ONE Director he or she CANNOT also be the Secretary A company must have a minimum of one shareholder who may be a corporate body or an individual No minimum paid up share capital A minimum of one share may be issued Capital may be denominated in any currency Shareholders and directors meetings may take place outside Great Britain The company is required to have a registered office in the UK
Every company must prepare annual accounts that report on the performance and activities of the company during the year. The period reported on in the accounts is called the financial year. This starts on the day after the previous financial year ended or, in the case of a new company, on the day of incorporation.
WHAT PERIOD MUST A COMPANY'S FIRST ACCOUNTS COVER?
For all new companies, the first accounting reference period is automatically set as the first anniversary of the last day in the month in which the company was incorporated. For example, if the company was incorporated on 10 June 2001 its ARD would be set at 30 June, and the first accounts would cover a period from 10 June 2001 to 30 June 2002 - or up to seven days either side of that date.
WHAT ABOUT COMPANIES INCORPORATED OVERSEAS?
A company incorporated overseas which has registered:
A branch in Great Britain, and which does not have to publish audited accounts in its country of incorporation; or a place of business in Great Britain. Is subject to the same ARD rules except that it is not restricted as to how often it may extend accounting periods. The same Form 225 is used to change the ARD.
Important Links
Coddan is one of the foremost and most economical providers of limited companies formation and new business entity registration services in the UK. Coddan is a leading company set-up agent that has expertise in off the shelf companies, ready-made companies, own name company formation as well as company search, credit checking, company secretarial, accounting and bookkeeping, tax advice & charity registration. Simple cost effective limited company set-up. No paper forms to complete, all information provided electronically. Coddan offer a range of services for business, including business company set-up, virtual office services, mailing address, and company secretarial services.
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DO ALL COMPANIES HAVE TO KEEP ACCOUNTING RECORDS?
Yes. All limited and unlimited companies, whether or not they are trading, must keep accounting records.
WHAT DOES A SET OF ACCOUNTS INCLUDE?
Generally, accounts must include:
A profit and loss account (or income and expenditure account if the company is not trading for profit). A balance sheet signed by a director. An auditors' report signed by the auditor (if appropriate). A directors' report signed by a director or the secretary of the company. Notes to the accounts; and group accounts (if appropriate).
DO ALL COMPANIES HAVE TO DELIVER THEIR ACCOUNTS TO THE REGISTRAR?
All limited and public limited companies must send their accounts to the Registrar. If they are eligible and wish to, medium-sized, small, very small and dormant companies may prepare and file "abbreviated accounts".
WHAT HAPPENS TO DOCUMENTS SENT TO COMPANIES HOUSE?
The documents and forms you deliver to Companies House are scanned to produce an electronic image. The original documents are then stored, and the electronic image is used as the working document. When your business contacts view the company record, they see the electronic image reproduced on-line or on microfilm. So it is important not only that the original is legible, but that it can also produce a clear copy. The remainder of this chapter lays down a few quality guidelines to follow when preparing accounts and other documents for filing at Companies House.
WHAT HAPPENS IF MY DOCUMENTS DO NOT MEET THE GUIDELINES?
Section 706 of the Act allows Companies House to reject documents that cannot be captured electronically, giving a notice saying why they are unacceptable. An acceptable copy must be delivered within 14 days of the notice (otherwise Companies House treat the original as not having been delivered).
HOW SHOULD DOCUMENTS BE SET OUT?
Every document delivered to the Registrar must state prominently the registered number of the company, and must comply with any requirements specified by the Registrar relating to the legibility of that document. Briefly, documents should be on A4 size, plain white paper between 80gsm and 100gsm in weight with a matt finish. Text should be black, clear, legible, and of uniform density.
WHAT IS A SMALL OR MEDIUM-SIZED COMPANY?
Public companies and certain companies in the regulated sectors cannot qualify as small or medium-sized companies. For other companies, the size of the company in terms of its turnover, balance sheet total (meaning the total of the fixed and current assets) and average number of employees determines whether it is classed as small or medium-sized. The exact conditions are given below. To be a small company, at least two of the following conditions must be met:
General Advantages of UK Private Limited Companies:
1. Liability is, in the vast majority of cases, strictly limited to the investments made by the shareholders. 2. Company Officers are not personally liable for their actions unless there is a clear and serious breach of their fiduciary duty. 3. Limited companies often benefit from greater prestige than their sole proprietorship or partnership counterparts. The reason is because such an enterprise normally requires more planning and thus is deemed more credible. 4. Limited companies often benefit from significant tax advantages. In fact, many countries around the world give exclusive tax incentives to this type of entity. 5. The rights of shareholders are normally clearly defined and protected. 6. Corporate taxes only become payable after the end of the financial year. This means money that would otherwise be taxed on a monthly or quarterly basis, is available to earn further interest before the final payment of tax. 7. You need only appoint one Director and one Shareholder. 8. Directors can be corporate bodies or private individuals. 9. A Director can be of any nationality. 10. All companies must appoint a company Secretary who can be of any nationality.
Annual turnover must be £ 2,800,000 or less. The balance sheet total must be £ 1,400,000 or less. The average number of employees must be 50 or fewer.
To be a medium-sized company, at least two of the following conditions must be met:
Annual turnover must be £ 11,200,000 or less. The balance sheet total must be £ 5,600,000 or less. The average number of employees must be 250 or fewer.
Generally, a company qualifies as "small" or "medium-sized" in its first financial year, or in any subsequent financial year if it fulfils the conditions in that year and the year before. If the company ceases to be small or medium-sized, the exemption continues for the first year that the company does not fulfil the conditions.
If you think the company might qualify as small or medium-sized, you should consult a professional accountant before you prepare "special-provision" accounts. If you abbreviate the accounts, you will also need a special auditor's report for filing with the Registrar, confirming that the company qualifies to produce such accounts.
WHAT IF A SMALL OR MEDIUM-SIZED COMPANY IS REQUIRED TO PREPARE GROUP ACCOUNTS?
A small parent company which has prepared individual accounts for its members using the special provisions of section 246(2) or (3) of the Companies Act 1985, may choose to prepare group accounts under the special provisions of section 248A. However, a small group cannot file abbreviated accounts at Companies House. Group accounts prepared under section 248A must contain a statement above the signature on the balance sheet, confirming that they are prepared in accordance with the special provisions of Part VII of the Companies Act 1985 relating to small companies.
AUDIT EXEMPTION FOR DORMANT COMPANIES. WHAT EXEMPTION IS AVAILABLE?
Dormant companies can claim exemption from audit and need only prepare and deliver to Companies House an abbreviated balance sheet and notes. A profit-and-loss account and directors' report do not have to be included in dormant company accounts filed at Companies House but a directors' report must be provided to members.
WHAT IS A DORMANT COMPANY?
A company is dormant if it has had no "significant accounting transactions" during the period. For accounting periods ending on or after 26 July 2000,when considering if a company is dormant you can disregard the following financial transactions:
Payment for shares taken by subscribers to the memorandum of association. Fees paid to the Registrar of Companies for a change of company name, the re-registration of a company and filing annual returns; and civil penalties imposed by the egistrar of companies for delivering accounts to the Registrar after the statutory time allowed for filing.
For accounting periods ending before 26 July 2000, only payment for shares taken by subscribers to the memorandum of association may be disregarded. A company may not take advantage of the dormant company audit exemption if it is:
A banking company, that is, a company authorised under the Banking Act 1987. An insurance company, as defined in the Insurance Companies Act 1982. An "authorised person" under the Financial Services Act 1986.
If the company has not been dormant since incorporation, but has become dormant, it may take advantage of the exemptions provided that:
It has been dormant since the end of the previous financial year; and it does not have to prepare group accounts for that year; and it qualifies as a "small company" in relation to that year, or would have qualified as small but for the fact that it is: a public company; or a member of a group of companies which included a public company, a banking or insurance company or an authorised person under the Financial Services Act 1986.
WHAT INFORMATION MUST DORMANT ACCOUNTS CONTAIN?
Dormant accounts filed at Companies House need not include a profit-and-loss account or directors' report. Model balance sheets are shown at the end of this chapter. Unaudited dormant accounts are much simpler than those of a trading company but must show: an abbreviated balance sheet containing statements above the director's signature to the effect that the company was dormant throughout the accounting period; any previous year's figures for comparison - even though there are no items of income or expenditure for the current year. Certain notes to the balance sheet.
CAN I OBTAIN A STANDARD FORM FOR DORMANT ACCOUNTS FROM COMPANIES HOUSE?
Yes, although you do not have to use it. Form DCA, available from Companies House, is for dormant companies that have not traded since incorporation. This form is unsuitable for companies that became dormant after trading. However, model balance sheets and notes for all types of dormant companies are set out at the end of this chapter.
PARTNERSHIP ACCOUNTS
The Partnerships and Unlimited Companies (Accounts) Regulations 1993 require companies which are members of "qualifying partnerships" to prepare and attach accounts of the partnership to their own accounts.
WHAT IS A QUALIFYING PARTNERSHIP?
A qualifying partnership is a partnership that is governed by the laws of any part of Great Britain if each of the members is: a limited company; or an unlimited company or a Scottish firm, each of whose members is a limited company.
Please Note: Any reference to a qualifying partnership in relation to a limited partnership is a reference to the general partners only. Any reference to a limited company, an unlimited company, a Scottish firm or another partnership includes any comparable undertaking formed under the laws of another state.
WHAT ACCOUNTS MUST THE PARTNERSHIP PREPARE?
The partnership must prepare and have audited accounts as if it were a company formed under the Companies Act 1985 so as to conform to Part VII of that Act. The Act has been amended to take account of the circumstances of qualifying partnerships. However, the partnership may take advantage of regulation 7, which permits the accounts to be dealt with on a consolidated basis as group accounts prepared by either:
A member of the partnership which is established under the law of a member state of the European Economic Area (EEA); or a parent undertaking of such a member.
In these cases, the accounts must be prepared on a consolidated basis under the law of the member state in accordance with the Seventh Company Law Directive. A note must be included to say that the accounts have been prepared to take advantage of this regulation.
FOR WHAT PERIOD MUST THE PARTNERSHIP ACCOUNTS BE PREPARED?
The accounts may cover any period up to 18 months which may be specified in the partnership agreement. If a period is not specified in the agreement, the partnership accounts must be drawn up for each 12-month period ending on 31 March in each year.
WHEN MUST THE ACCOUNTS BE PREPARED?
The partnership accounts must be prepared within a period of 10 months after the end of the financial year.
ARE THERE ANY PENALTIES FOR NON-COMPLIANCE?
Yes. Every partner in a qualifying partnership or every director of a company that is a partner may be prosecuted and fined up to £ 5,000.
Guidance & FAQs
FAQs: Accounting Reference Dates
£ 32.00
This is our most popular package with UK residents, and includes:
The submission of forms detailing your company's executive officers
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