As we have discussed on a previous post, on 1st October 2009, the new Companies Act was introduced. The new act has had a number of implications on existing companies and the company formation process – you can find more information here.

One of the key implications of the new Companies Act, is the fact that it has brought in additional regulations and restrictions regarding company names. Companies House is now going to be stricter as to what they allow. Please see example of such restrictions below:

If ‘Catering Limited’ is already a registered company they would reject the following applications unless the application is for a company in the same group as “Catering Limited” and Catering Limited has given its consent:

• Catering UK Limited (or Ltd);
• Catering.co.uk Limited (or Ltd);
• Catering International Limited (or Ltd)
• Catering Company (Services) Limited (or Ltd);

Similarly, if ‘Hands Limited’ is already registered they would reject the following applications:

• Hand-S Limited or Ltd;
• H and S Public Limited Company (or PLC);
• H & S Services Limited (or Ltd);
• @H & S Limited (or Ltd);
• Hands: Limited (or Ltd);
• # H & S Limited (or Ltd);

This legislative change, will effect anyone considering the company formation process, or changing the name of an existing incorporation.

New proposals on company accounts

The European Commission has put forward a new proposal which allow EU member states to abolish the obligations for small companies in the region to submit accounts other than for tax purposes.

The EU have calculated that with the deteriorating economic climate, the additional administrative burden across the region is costing small businesses in time and money in excess of €6bn.

The new proposal, first raised in November 2008 is currently being considered by the European Parliament and the Council of Ministers.

In essence, the proposal is that a new type of a business entity is created to be known as a “micro entity”.  Micro entities are defined as very small companies that meet 2 of the 3 following criteria:-

• A balance sheet total of not more than €500,000.
• A net turnover of not more than €1m
• Not more than 10 as an average number of employees during the financial year

From what we understand, member states will be able to implement this in their own jurisdiction if they so wish although they could still require accounts to be prepared.

In practical terms, this will obviate the need for small companies to submit accounts to Companies House and accounts will only need to be sent in to the Inland Revenue.

There will obviously be many implications in different countries if these proposals are implemented.  If micro companies no longer need to prepare statutory accounts for filing at Companies House, it may well be that the information that needs to be sent to the tax man can be presented in a much simpler format.  The result of this will be a considerable reduction for the companies that would be affected.  Of course, this could also have serious knock on effects for accountants who are likely to see their revenues reduced.

Personally, I think this is a great move and although wearing my accountant’s hat, I can see challenges for us, the benefits to our small business clients will be enormous.

Ok, so you have taken the plunge and decided to form your own company, written the business plan and raised the finance. Now it is time begin your company formation – but where to start and what formation documents do you need? When forming a limited company there are four documents which you will need .These are:

Memorandum of association
This document is issued as a vital part of the company formation process. Essentially, the Memorandum of Association, establishes the company’s rules and regulations by which it will be governed.

This document sets out the following:
The company’s name.
The location of the company’s registered office.
What the company has been formed to do.
Details of the available share capital.

Articles of association
Here’s where you clarify the rules for running your recently formed company. At this stage you must state how the directors will run the company,, the company secretary and your meetings will be governed. This document is often left untouched after company formation, however, it can being amended as your company evolves

Form 10
This document provides details of the company secretary, first director(s) and the address of the registered office. All Company directors must provide their name, home address, date of birth, occupation and details of other directorships held in the last five years.

Form 12
This formation document is your company’s declaration that you will comply with all the legal requirements of company formation. It must be signed by either one of the company directors or secretary named on Form 10, or the solicitor forming the company. The signing of the document must be witnessed by a solicitor

You can get all of these documents HERE