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| 1. Company subscribers may be residents outside the UK.
2. You must appoint a minimum of 1 Director.
3. Directors can be corporate bodies or private individuals.
4. A Director can be of any nationality.
5. All companies must appoint a company Secretary.
6. A Secretary can be of any nationality.
7. If there is only ONE Director he or she CANNOT also be the Secretary.
8. There is no maximum and no minimum share capital.
9. There is no minimum share capital, no paid-in capital requirement.
10. The company is required to have a registered office in the UK.
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+44 (0) 800.081.1510
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 info@uk-companies-formations.co.uk |
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Form a company online in minutes at lawyer-free prices. Coddan was developed by expert attorneys with experience at the most prestigious law firms in the country. We’ve helped over 50,000 satisfied customers, and our know-how allows us to prepare legal documents quickly and efficiently. Our documents contain advanced provisions that are not found in simple “do-it-yourself” kits or manuals. Coddan lets you take care of common legal procedures without ever leaving your home or office. We’re open 24 hours a day, 7 days a week. Our research area contains plenty of helpful guidance. Simply answer an easy-to-understand questionnaire, and Coddan takes care of the rest - no need to download, no need to print. You will receive the completed legal documents printed on quality acid-free paper.
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With Coddan’s lawyer-free service, you can save up to 100% off the rates an attorney would charge for the same procedure. In addition, our fees are "per project", not "per hour," so you will know exactly what the total price will be. The information you provide to us is held in absolute privacy. We pledge NEVER to sell your name or personal information to any third party. In addition, we go the extra mile to make sure that our servers and connections incorporate the latest encryption and security devices. We strive to be the best legal documentation service on the web. If you are not satisfied with our services for any reason, please contact us immediately and we will either correct the situation or provide a refund, your choice.
Please note » The prices payable for the items that you order are clearly set out in the web site. There will be no contract of any kind between you and us unless and until we receive payment from you. We act as your agent in the incorporation of companies and electronic filing of Companies House forms. We are not able to guarantee that any such filing will be acceptable to Companies House, nor are there any contractual obligation upon us to do so. If Companies House rejects incorporation or other electronic filing, we will credit your account with a full refund and the contract between us will be made void. Companies House does not offer a cancellation facility for the incorporation of companies or the electronic filing of documents. We will be unable to cancel any such submission on your behalf and will not refund any payment you have made. All prices shown at Coddan Web Site (www.uk-companies-formations.co.uk) are in Great British pounds.
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 Duty to Keep Accounting Records
All UK limited liability companies are required to keep records of the company's financial transactions. The records must contain sufficient detail to enable the financial position of the company to be determined at any time and so that the directors can ensure that any profit and loss account or balance sheet complies with the requirements of the Companies Act 1985. The records should contain all details of any income and expenditure and a record of the company's assets and liabilities. If a parent company has a subsidiary undertaking not registered under the Act it must ensure that sufficient records are maintained by or for the subsidiary so as to ensure that the profit and loss account and balance sheet of the parent company comply with the provisions of the Act.
The records MUST be kept by the company for a period of three years if it is a private company and six years if it is a public company.
- Accounting Reference Date
A limited company's first financial year begins on the day of its incorporation and ends on its accounting reference date, the end of the financial year. Each successive financial year begins the day following the date the previous balance sheet is made up to and ends on the next accounting reference date. The accounts may be made up to a date not more than seven days before or after the accounting reference date. This flexibility is allowed to enable a company to arrange a year end stock count at a suitable time.
For a new company, its first accounting period starts on the day of incorporation and ends on the last day of the month on which the anniversary of its incorporation falls. The date on which an accounting period ends is known as the company's "accounting reference date". The directors may change the accounting reference date of the company, including its automatically allocated date, provided that the first accounting period is not less than 6 months and not longer than 18 months. After the first period a company can fix its accounting reference date to as short a period as it wishes.
If the limited liability company becomes a subsidiary undertaking or a parent company the accounting periods for the two companies must coincide and in these circumstances, if necessary, a company may extend its accounting reference period even if it has, in the previous five years, extended its accounting reference date. The directors will determine any change in the company's accounting reference date and must notify the Registrar on Form 225. There is a limited exception to this rule provided by Section 227 if consolidation is inconsistent with giving a true and fair view and where the results of the subsidiary are not material.
- Changing the Accounting Reference Date
A change in accounting reference date is made by notice to the Registrar. A company can change its accounting reference date at any time whether or not that period has already expired provided the time allowed for filing the accounts for that period has not expired. A period cannot be extended beyond 18 months and, except in certain specified circumstances, a company cannot extend its accounting reference date more than once in any five-year period. Where a listed company changes its accounting reference date it must immediately notify a Regulatory Information Service. Additionally, where that change results in an accounting period of 14 months or more an additional interim report will be required.
- Preparation of Accounts
Pursuant to Section 226 a United Kingdom limited company's individual accounts must comply with the provisions of Schedule 4 with respect to the form and content of the profit and loss account, balance sheet and any additional information that is required to be given. There is an overriding provision that the accounts must give a true and fair view of the state of affairs of the company's financial affairs. In circumstances where it is necessary to depart from the provisions of Schedule 4 or other provisions such departure and the reasons for it must be noted in the accounts. In addition to Schedule 4, accounts must be prepared in accordance with accounting standards issued by the Accounting Standards Board. These are stated in Statements of Standard Accounting Practice, issued prior to 1 August 1990, and Financial Reporting Standards, issued after 1 August 1990.
- United Kingdom Parent Companies
In addition to the requirement to prepare individual accounts, the directors of a company, if it was, at the financial year end, a parent company, must prepare group accounts complying with Schedule 4A in terms of form and content. These group accounts consist of a consolidated balance sheet and a consolidated profit and loss account. The directors of the holding company can, if they so determine, decide not to consolidate the accounts of a subsidiary if it carries out a substantially different activity to the parent and to consolidate the results would result in the true and fair view being obscured.
A parent undertaking is one which: holds the majority of the voting rights in another company. Is a member of another company and has the right to remove or appoint a majority of the directors. Has the right to exercise dominant control either by a right contained in the Memorandum or Articles of Association or by a contractual arrangement. Is a member of the company and controls a majority of the voting rights by agreement with other shareholders. Has a participating interest and either exercises dominant control or the affairs of both companies are managed together.
These definitions of parent and subsidiary undertakings contained in Section 258 apply only for the purposes of determining whether group accounts should be prepared. In all other instances the definitions of parent and subsidiary companies are those contained in Section 736 and Section 736A. Exemptions from the requirement to prepare group accounts are given by Section 228(1) where the parent undertaking is itself a subsidiary undertaking of a company registered in an EU Member State. This exemption is not available to a company which has shares that are listed on the stock exchange of any EU Member State.
In addition to the exemptions available under Section 228 a subsidiary undertaking may be excluded from consolidation if its inclusion is not material for the purpose of giving a true and fair view (Section 229(2)). Additional exemptions apply where the exercise of control by the parent company is substantially restricted on a long-term basis, the necessary information to enable the consolidation to take place cannot be obtained without an unreasonable expense, or the parent company holds the shares with a view for re-sale and the company has not previously been included in any consolidated accounts of the parent (Section 229(3)).
- Small and Medium-Sized Companies
Companies falling within the definitions of either small or medium-sized may deliver abbreviated accounts to the Registrar of Companies. Full accounts must, however, be prepared and issued to shareholders. Certain companies that qualify as small may be exempt from the requirement to prepare audited accounts in accordance with Section 249A. The provisions relating to the qualification of a company to claim exemption from filing audited accounts with the Registrar of Companies are contained in Sections 246 and 247. Companies do not qualify as small or medium-sized if at any time during the financial year they were: public companies, banking or insurance companies, companies authorised under the FSMA 2000, a company which is a member of a group containing: a public company (dormant subsidiaries qualify for exemptions); a company that can offer its shares or debentures to the public; any company authorised under the Banking Act 1987, an insurance company subject to the Insurance Companies Act 1982 or a company authorised under the FSMA 2000.
A small company is one which satisfies any two of the following conditions: turnover must not exceed £2,800,000; balance sheet total must not exceed £1,400,000; average number of employees must not exceed 50. A medium-sized company is one which satisfies any two of the following conditions: turnover must not exceed £11,200,00; balance sheet total must not exceed £5,600,000; average number of employees must not exceed 250. A company qualifies as small or medium-sized in its first financial year or any subsequent year if it meets the conditions in that year and the year before. If a company qualifies as small or medium-sized in one financial year but not in the next, it may still file abbreviated accounts in that second year, unless disqualified under Section 246. It will not be able to file abbreviated accounts in the third year unless it qualifies in that year as either small or medium-sized.
- Small And Medium-Sized Groups
A parent company need not prepare, or deliver, group accounts if the group qualifies as either small or medium-sized if the aggregate figures for turnover, balance sheet total and average number of employees would, if applied to an individual company, qualify it as either small or medium-sized. The qualifying criteria are slightly modified, as shown below, and the group must satisfy any two of the following conditions:
For a small group: turnover must not exceed £2,800,000 (net) or £3,360,000 (gross); balance sheet total must not exceed £1,400,000 (net) or £1,680,000 (gross). Average number of employees must not exceed 50. For a medium-sized group: turnover must not exceed £11,200,000 (net) or £13,440,000 (gross). Balance sheet total must not exceed £5,600,000 (net) or £6,720,000 (gross). Average number of employees must not exceed 250. The reference to net means those aggregate figures for turnover and balance sheet total with the set offs and other adjustments made in accordance with Schedule 4A. The reference to gross turnover or balance sheet total means those aggregate figures prior to any set off or other adjustment. The group accounts must satisfy the appropriate conditions on either a net or gross basis but not using one net and the other gross. If auditors certify that the parent company is eligible for qualification as either small or medium-sized, and group accounts are not prepared, the report of the auditor must be attached to the individual accounts of the parent company. If advantage is taken of this exemption by the directors there is no statutory provision by which the shareholders of the company can require that group accounts be prepared and laid before them.
- Request for Audit by Shareholders
As the exemption is automatic rather than optional, as in the case of abbreviated accounts, shareholders holding between them 10% of the issued share capital or 10% of any issued class have the right to require that an audit is undertaken. If the company does not have a share capital, 10% of the members may exercise the right to require an audit. To require an audit notice in writing must be deposited at the company's registered office no later than one month before the end of the financial period for which the audit is requested.
- Summary Financial Statements
A listed public company may, subject to any provisions contained in its Articles of Association, issue summary financial statements to its shareholders in place of the full statutory accounts. Any shareholder receiving summary financial statements may require that the full accounts be sent to him. The summary financial statement may be made available on a website or sent by electronic communication to members who have supplied an address for that purpose. In order to issue summary financial statements, to its shareholders a company must comply with the conditions set out in the Companies (Summary Financial Statement) Regulations 1995, SI 1995/2092 (as amended by Schedule 2 to the Companies Act 1985 (Electronic Communications) Order 2000):
The company must have ascertained that the individual shareholder does not wish to receive copies of the full accounts. The period allowed for the laying and delivery of the accounts must not have expired (in most cases this will be seven months), although the Listing Rules require the accounts to be issued to shareholders within six months. The summary financial statement must be approved by the board of directors and the original copy signed on their behalf by a director whose name must be stated on the copies issued to shareholders. If the company is not required to prepare group accounts the summary financial statement must include the following statement: "This summary financial statement does not contain sufficient information to allow for a full understanding of the results and state of affairs of the company. For further information the full annual accounts, the auditors' report on those accounts and the directors' report should be consulted".
If the company is required to prepare group accounts the summary financial statement must include the following statement: "This summary financial statement does not contain sufficient information to allow for a full understanding of the results of the group and state of affairs of the company or the group. For further information the full annual accounts, the auditors' report on those accounts and the directors' report should be consulted". The summary financial statements must include a statement informing shareholders of their right to receive a copy of the full annual accounts. The summary financial statement must be issued together with a printed pre-paid card to enable shareholders to notify the company that they wish to receive a copy of the full accounts for that year and whether they wish to receive copies of the full accounts in future years.
- Publication, Laying and Delivery Of Accounts
United Kingdom companies must deliver a signed copy of their accounts which need not be full accounts, whether audited or not, to the Registrar, and lay a copy before the members, which must be full accounts, in general meeting as follows: private companies within 10 months of the year end and public companies within 7 months of the year end. Listed companies must publish their accounts as soon as possible after the year end but in any event not more than 6 months after the year end. Listed companies are also required to issue interim accounts within 90 days of the period end and announce their preliminary full year results within 120 days of the year end.
If the accounts are the first accounts of the company and the accounts cover a period of greater than 12 months the period allowed is 10 or 7 months from the first anniversary of the incorporation of the company or 3 months from the end of the financial year whichever expires last. If the company trades outside the United Kingdom, Channel Islands or the Isle of Man the company may apply for an extension of three months to the period using Form 244. If the company's accounting reference date has been changed resulting in a shorter period, the period allowed for delivery of the accounts is either 10 or 7 months as appropriate or 3 months from the end of the accounting period, whichever occurs last.
Under Section 244(5) the secretary of state may grant an extension to the period for delivery of the accounts if there is sufficient cause. Any application must be made before the expiry of the period for delivery of the accounts. The application is made in writing, there being no statutory form, unlike the form used to claim for a 3-month extension under Section 244(3).
Copies of the full accounts must be sent to all members of the company, all debenture holders and all persons entitled to receive notice of general meetings. The accounts must be issued to these persons not less than 21 days prior to the general meeting at which they are laid before the members unless all the members agree otherwise. Copies of the accounts may be circulated by electronic communication or made available on the company's website provided members are notified that the accounts are available to view.
A private company can by elective resolution exempt itself from the obligation to lay accounts before the members in general meeting.
- Unlimited Companies
Unlimited companies do not need to file a copy of their accounts with the Registrar of Companies unless at any time during the period covered by the accounts, the company was: a subsidiary or a parent of a limited undertaking; or banking or insurance company (or the parent of such a company); or a "qualifying" company in terms of the Partnerships and Unlimited Companies (Accounts) Regulations 1993; or operating a trading stamp scheme. A company will be a qualifying company if it is a member of a partnership governed by the laws of any part of Great Britain and all the other members of the partnership are either limited companies, Limited Liability Partnerships or unlimited companies or a Scottish firm each of whose members is a limited company.
- Additional Reporting Requirements
The auditors of companies subject to statutory regulation are required to report direct to that company's regulators in certain circumstances. The companies concerned are: banks; building societies; insurance companies; friendly societies; investment businesses regulated under the FSMA 2000. The duty to report to a company's regulator arises in circumstances where the auditor concludes that a matter is relevant to the regulator's function having regard to matters specified in statute or any related regulations including rules of the regulator and where in the auditor's opinion there is reasonable cause to believe that a matter maybe material to the regulator. Although this additional duty on auditors relates to their role as auditors, if the firm also undertakes non-audit services, those responsible for the audit work should request assurances from their colleagues that they are not aware of any matters that would require disclosure to the regulator.
- UK Limited Companies Audit Exemption
It's not so long ago that every United Kingdom limited company was required to follow the same law and regulations when preparing their accounts and all of them had to be audited. That all changed in the 1980s. First we had the separation of small, medium and large companies, with a change to company law introducing new rules about what had to be disclosed in the accounts of each.
At the same time companies with sales of less than £350,000 became exempt from audit in a move which saw those registering turnover of between £90,000 and £350,000 having a less rigorous "accounts review" introduced in place of the full audit. The accounts review was never quite taken seriously and after a couple of years it was dropped. Now, in a further change, the limit for audit exemption has been increased so that most companies (there are, inevitably, exceptions) with an annual turnover of less than £1 million will not need an audit for years ending after 25 July 2000. Shareholders holding more than 10% of a company will still be able to insist on an audit if they want one. It is expected that this will be followed by a further change in a year or two that will increase the limit again to £4.8 million in line with current EU law. However, the current proposal is that companies with sales falling between £1 million and £4.8 million would then require a new, less-than-audit inspection to be known as the "Independent Professional Review" - but this is currently under discussion and may change.
Allied to this the government intends to scrap the option that allows small and medium sized companies to file abbreviated accounts at Companies House. This currently provides a measure of confidentiality to those that can take advantage of it, but with the removal of the audit, the Department of Trade and Industry believes that this right should go.
So what are the immediate practical effects? For companies that no longer need an audit there should be cost savings, though the amount of the overall reduction will depend of the balance between annual accounts and audit work - those with high quality records and procedures will save proportionally more. Directors of companies with past annual sales of less than £1 million that may exceed that amount in the current year need to check whether they will need an audit before they reach their year end, as some audit procedures (stock take observation, for example) cannot be carried out after the event. And a final thought - don't throw the audit away too quickly! In the US and elsewhere, audits have never been mandatory for private companies yet many choose to have an audit to give added credibility to their accounts.
This can be helpful in many situations - for example where there are shareholders not involved in the company's management (such as in second or third generation family businesses); where it is intended to raise additional outside capital or simply to reassure the bank or other provider of "transaction finance" (and thereby reduce the company's risk profile).
Exemption from audit cannot be claimed by: a public company unless the company is dormant. A company which is a subsidiary of an overseas undertaking. A bank, insurance company, enrolled insurance broker or authorised person under the Financial Services Act. A special register company under the Trade Union and Labour Relations (Consolidation) Act 1992 or an employers association. Companies where an audit is required by members holding at least 10% of issued share capital. A dormant company may pass a resolution not to appoint auditors, but not if it is a banking or insurance company or an authorised person under the Financial Services Act. A voluntary standard format for accounts may be used by companies which have been dormant since incorporation.
- Approval of Accounts and Directors' Report
The accounts must be approved by the board of directors, one of whom must sign the balance sheet. The directors' report MUST also be approved by the board and signed by a director or the secretary. In both cases, the name of the person signing should be stated and copy with an original signature should be delivered to Companies House.
- Circulation of Accounts and Reports
The accounts must normally be considered by a general meeting of the company, usually the annual general meeting. A copy of the accounts and reports must be sent to every member or debenture holder, and anyone else entitled to attend, at least 21 days before the meeting takes place. It is the duty of the directors to call the meeting at the appropriate time. In the case of a private company, the meeting to consider the accounts will normally be not later than 10 months after the accounting reference date. If the company's first accounts cover a period of more than 12 months, the time allowed will be restricted to 22 months from the date of incorporation.
For a public company the time allowed is 7 months after the accounting reference date or, in the case of first accounts covering more than 12 months, 19 months from incorporation, subject to there being a minimum period of 3 months following the period covered by the accounts. A company may be able to claim extra time if it has overseas interests (in which case Form 244 should be sent to Companies House) or if the secretary of state has agreed that there are special reasons for doing so. In either case, the extension must be arranged before the end of the period originally allowed for delivery of the accounts.
While a company may pass an elective resolution to dispense with the laying of accounts and reports before a general meeting, the accounts and reports would still need to be circulated.
- Delivery of Accounts to Companies House
The time allowed for delivering accounts to Companies House is the same as is allowed for laying them before a general meeting. When accounts are delivered late, there is an automatic civil penalty in the range of £100.00 to £1,000.00 for a private company and £500.00 to £5,000.00 for a public company.
Also, the directors are personally responsible for the delivery of accounts to Companies House. They are liable to prosecution in the Magistrates' Court (the Sheriff Court in Scotland) if the accounts are delivered late or not at all. A conviction would mean a criminal record and usually a fine of up to £5,000.00. Persistent failure to delivery accounts or other documents on time could mean a daily default fine of up to £500.00. It could also result in the disqualification of those concerned as company directors.
- What is the Audit Exemption Threshold?
It is the level below which most small companies are exempt from the requirement under section 249A of the Companies Act 1985, to have their accounts audited.
- Can All Companies Benefit From Audit Exemption?
Certain companies cannot benefit from this exemption. Section 249B of the 1985 Act sets out those companies. Those not exempted from audit include public companies, registered insurance brokers, persons or representatives authorised under the Financial Services and Markets Act 2000, a special registered body or employers' association as defined in the Trade Union and Labour relations (Consolidation) Act 1992, or a parent company or subsidiary undertaking.
- Can Small Companies Still be Required to Have an Audit for Other Purposes?
Yes. Under company law, shareholders can require a company to produce audited accounts. Main providers of finance can also require a company to produce audited accounts although this is not a requirement under company law.
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