Learning Outcomes
This article outlines the procedures and legal requirements for incorporating and registering companies in England and Wales, covering:
- Identifying the statutory documents and information required for company formation, including Form IN01, the memorandum and articles of association
- Explaining the step-by-step process of registration at Companies House and the significance of statements of capital, liability and compliance
- Comparing the use, modification and entrenchment of Model Articles against bespoke articles and their contractual effect under s.33 CA 2006
- Distinguishing companies limited by shares and by guarantee and applying those differences to IN01 content and client advice
- Advising on company names, registered offices, SAILs and PSC requirements, and ensuring they comply with statutory rules and guidance
- Analysing the legal effect and consequences of incorporation, particularly the evidential role of the certificate of incorporation and s.15–16 CA 2006
- Planning and documenting the first board meeting and immediate post-incorporation actions, including opening bank accounts and issuing share certificates
- Managing Companies House filing obligations after incorporation, such as accounts, confirmation statements and returns of allotment (SH01)
- Assessing promoter status and liability on pre-incorporation contracts under s.51 CA 2006, and structuring transactions to minimise personal risk
SQE2 Syllabus
For SQE2, you are required to understand the legal and practical steps required to form and register a company, and to advise clients on related risks and obligations, with a focus on the following syllabus points:
- company formation by registration and how this differs from unincorporated businesses
- the mandatory documents for incorporation (IN01, memorandum, articles of association)
- statement of capital, guarantee and compliance confirmations required by the CA 2006
- PSC disclosure and PSC register requirements and practical steps
- the use and effect of model articles vs. bespoke articles (including entrenchment)
- resolutions associated with constitutional changes (ordinary vs. special) and filing of special resolutions
- the function and legal effect of a certificate of incorporation (s.15 CA 2006) and s.16 consequences
- registered office, company name rules (including sensitive words) and immediate post-incorporation actions
- the legal status and post-formation formalities of shelf companies
- the role of promoters and promoter liability under s.51 CA 2006, including pre-incorporation contracts and novation
- Companies House filing requirements during and after incorporation (accounts, confirmation statement, SH01, director/office changes)
- distinction between companies limited by shares vs. guarantee, and minimum director requirements
Test Your Knowledge
Attempt these questions before reading this article. If you find some difficult or cannot remember the answers, remember to look more closely at that area during your revision.
- What documents must be submitted to Companies House to validly incorporate a company?
- What is the legal risk to a promoter who signs a contract before the company is registered?
- What is the default set of rules governing a private limited company’s internal management if bespoke articles are not filed?
- What is the legal effect of a company’s certificate of incorporation?
Introduction
When a client seeks to incorporate a business as a company, strict legal procedures must be followed to achieve corporate status and limited liability. This article outlines the core legal and practical steps required to register a company in England and Wales, including the statutory documentation, process at Companies House, and critical risks for those acting before registration. It also identifies immediate post-incorporation actions and the longer-term compliance regime that directors must manage.
Incorporated vs. Unincorporated Businesses
A company is a separate legal “person,” only brought into existence through legal incorporation under the Companies Act 2006. In contrast, sole traders and general partnerships are unincorporated; they arise automatically and have no separate legal personality. Limited liability partnerships (LLPs) are incorporated under the Limited Liability Partnerships Act 2000 and also have separate legal personality, but they are a distinct business medium with members (not shareholders) and their own incorporation process.
Key Term: incorporated business
A business formed and registered as a company or LLP, possessing its own legal personality and distinct existence from its owners.Key Term: unincorporated business
A business (such as a sole trader or general partnership) which is not a separate legal entity and is indistinguishable from its owner(s).Key Term: incorporation
The legal process by which a separate company or LLP is registered and acquires legal personality.
The Incorporation Process and Required Registration Documents
Nearly all companies in England and Wales are incorporated by registration at Companies House. The process is document-driven and must be completed before the company lawfully exists. Without registration, there is no company and no corporate limited liability.
Essential Documents and Information
To register a company by incorporation, the founders must submit to Companies House:
- Form IN01 (Application for Registration): requiring
- proposed company name and registered office address
- details of directors and secretary (if any), including service addresses and dates of birth where required
- company type (private/public, limited by shares/guarantee)
- statement of initial capital/shares (if any)
- subscribers’ (first members’) details
- People with Significant Control (PSC)
- statement of liability (shares/guarantee)
- statement of compliance confirming statutory requirements for registration are met
- Memorandum of Association (executed by the subscribers)
- Articles of Association (unless intending to adopt the default Model Articles)
- The relevant registration fee (standard and same-day services available)
The IN01 is the central statutory application. For companies with share capital, a statement of capital must set out the total number of shares to be taken on formation, their aggregate nominal value, any different classes and rights, and the amount paid or unpaid on each share, itemised per subscriber as required by the CA 2006.
Key Term: Form IN01
The statutory application form for registering a company, containing key constitutional details required by law.Key Term: statement of capital
A mandatory statement for companies with share capital, setting out the number and nominal value of shares, class rights, and amounts paid or unpaid, both in aggregate and per subscriber.Key Term: statement of compliance
A confirmation on IN01 that the statutory requirements for incorporation have been satisfied.Key Term: memorandum of association
A brief signed statement in a prescribed form demonstrating the subscribers’ intention to form a company and become its first members.Key Term: articles of association
The company’s constitutional rules, regulating how it is managed, how decisions are made, and the rights of members/directors. Companies may use standard Model Articles, modify them, or draft entirely bespoke articles.Key Term: registered office
The official address for service of documents on the company; it must be kept up to date with Companies House and displayed on company stationery and certain online materials.Key Term: PSC Register
The register of persons with significant control over a company (e.g. holding over 25% of shares or voting rights; the right to appoint/remove a majority of directors; or having significant influence/control). Companies must maintain PSC details and file PSC information with Companies House.
Directors: Every private company must have at least one director, and at least one must be a natural person aged 16 or over. A private company is not required to appoint a company secretary, though it may choose to do so.
Registered office: Every company must propose and maintain a registered office (s.86 CA 2006). The office determines the company’s jurisdiction (England and Wales, Scotland or Northern Ireland) and is the address for service of official documents. Companies may also nominate a Single Alternative Inspection Location (SAIL), allowing certain company records to be inspected at that alternative address.
Key Term: SAIL (Single Alternative Inspection Location)
An optional address where specified company records can be kept and made available for inspection instead of at the registered office, notified to Companies House.
Company name: Private companies must end their name with “Limited” or “Ltd” (or Welsh equivalents), and certain sensitive words and expressions require prior approval. A proposed name must not be the same as an existing registered name and must not be offensive or suggest unlawful activity.
Model Articles and Bespoke Articles of Association
A company may:
- Rely on the Model Articles provided by regulation (different versions exist for private companies limited by shares, by guarantee, or public companies); or
- Submit its own tailored or amended articles.
If no articles are filed, the relevant Model Articles automatically apply on incorporation. Articles form a statutory contract between the company and its members (s.33 CA 2006) and should be construed as commercial documents consistent with reasonable business efficacy.
Key Term: Model Articles
A standard set of articles prescribed by law, generally adopted unless the company files amended or bespoke articles on formation.
Articles may be “entrenched” (made harder to amend) provided entrenchment is notified on incorporation or by later filing. Most constitutional changes require a special resolution of the members (75%+), and a copy of any special resolution affecting the constitution must be filed at Companies House generally within 15 days.
Key Term: entrenchment (articles)
A provision in the articles that makes alteration more difficult (for example, requiring a higher majority or additional conditions), which must be notified to Companies House.Key Term: ordinary resolution
A member decision passed by a simple majority of votes (over 50%), used for routine matters unless statute or the articles require a higher threshold.Key Term: special resolution
A member decision passed by at least 75% of votes, required for key constitutional changes (such as changing the name or altering the articles).
Certificate of Incorporation
Upon satisfactory receipt and review, Companies House issues a certificate of incorporation, which conclusively proves the company’s existence and legal personality from the date specified. The certificate is definitive evidence of registration under s.15(4) CA 2006. The legal consequences of incorporation follow automatically:
- the company comes into existence and can exercise its powers
- subscribers become members
- the directors named on registration are appointed
Key Term: certificate of incorporation
An official document issued by Companies House, confirming the company’s valid formation and legal personality; conclusive evidence of incorporation.
Post-Incorporation Steps and Companies House Filings
Once the company is incorporated, directors must ensure immediate and ongoing compliance. Key steps include:
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Convene a first board meeting to address: appointing a chair; opening bank accounts; approving formation costs; authorising use of a trading name; fixing the accounting reference date; appointing auditors (if required); allotting any further shares and authorising issue of share certificates; and approving statutory registers and where they will be kept (registered office or SAIL). Where directors propose to allot further shares, consider authority under s.550/s.551 CA 2006 and any pre-emption rights.
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Update Companies House promptly if the registered office or directors change, or on the appointment/removal of a company secretary (if any).
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File annual accounts by the statutory deadline (private companies: generally nine months from the end of the accounting reference period) and file the annual confirmation statement.
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Maintain statutory registers (members, directors, secretaries (if any), PSC, and charges where applicable) and ensure they are up to date and available for inspection.
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Issue share certificates within the statutory period (often within two months of allotment or transfer) and update the register of members without undue delay.
Key Term: confirmation statement
An annual filing (form CS01) confirming the company’s details are up to date and notifying changes (including shareholdings and PSC information).Key Term: return of allotment (SH01)
A filing required when the company allots new shares, summarising the allotment and updated statement of capital, to be delivered to Companies House within one month of allotment.
Failure to comply with filing requirements can result in criminal penalties for the company and its officers. Special resolutions must be filed, and some ordinary resolutions (for example authorising certain director transactions) have associated filing or disclosure requirements. Directors should also ensure stationery and website disclosures show the company’s name, registered office and number.
Shelf Companies—Speed and Practical Risks
Shelf companies are pre-formed companies (often set up by professionals or agents) available for “instant” purchase. Shelf companies are seldom used now but may provide a solution if urgent incorporation is necessary. New owners must promptly file forms to update directors, PSC, registered office, and issue or transfer shares where appropriate. A first board meeting should immediately adopt any bespoke articles or shareholders’ agreement the client requires, approve any name change, and normalise banking and insurance arrangements.
Key Term: shelf company
A pre-registered company, never traded, immediately available for purchase and customisation by a new owner.
Role of Promoters and Pre-Incorporation Contracts
Individuals who arrange the formation and registration of the company (such as founders or agents) are termed promoters. Promoters often negotiate with landlords, suppliers or lenders before registration to secure key assets and contracts. Statutory rules strictly govern the legal effect of contracts made before the company exists.
Key Term: promoter
A person who, by their actions, brings a company into existence, typically by arranging incorporation and conducting pre-registration business.Key Term: pre-incorporation contract
A contract made on behalf of a company before the date of its registration; at law, the purported company is not bound and the promoter(s) signing may be personally liable.
Under s.51 CA 2006, a person who purports to act on behalf of a company before it is formed is personally liable on the contract—unless a novation is agreed after incorporation that substitutes the company as a party and releases the promoter. There is no statutory “ratification” that can make a pre-incorporation contract binding on the newly registered company; adoption is ineffective at law without a novation. In practice, contracts should be expressed to be conditional on incorporation and subsequent execution by the company, or deferred until the company exists.
Worked Example 1.1
Samira and Chris intend to register “Sunbeam Interiors Ltd” but, to secure premises, sign a 10-year lease “for and on behalf of Sunbeam Interiors Ltd” before submitting documents to Companies House. After incorporation, the company does not occupy the premises or pay rent. The landlord seeks payment. Who is liable?
Answer:
Samira and Chris, as promoters, are personally liable on the lease signed before incorporation. The company cannot be bound by a contract made before it existed, unless the landlord (and all parties) novates the contract after incorporation. If the contract remains as originally signed, only the promoters can be sued.
Promoter Liability: Risks and Solutions
Promoters are always at risk of personal liability for pre-incorporation contracts unless:
- The contract is expressly conditional on successful registration and subsequent execution or assumption by the company;
- The company is later joined as a party through a novation (all parties consent), or
- The contract is replaced after incorporation.
If not, promoters will be personally liable—even if they sign “for and on behalf of” the intended company.
Filing Obligations and Ongoing Compliance
Post-incorporation, Companies House filings must be made for any changes to:
- Directors or secretaries
- Registered office address
- Shareholders or persons with significant control
- Share capital or issued shares
- Company name or articles
Delays or inaccuracies can result in criminal liability for the company and the responsible officers. For new share issues, ensure: authority to allot under s.550 (single class private companies) or s.551 (other companies); compliance with pre-emption rights where applicable; board and shareholder approvals; filing SH01 with the updated statement of capital; updating the register of members; and issuing share certificates within the required period.
Exam Warning
Missing, incomplete, or incorrect registration documents will delay or invalidate a company’s incorporation. Before filing, check all statutory requirements and confirmations, including PSC information, are fully satisfied. Ensure company name eligibility and registered office jurisdiction are correct, and that the articles filed align with any intended entrenchment. After any allotment, file SH01 within the statutory period and keep the register of members current; late filings can expose officers to personal liability.
Worked Example 1.2
Grace is instructed to incorporate a private company for a client. She files Form IN01 with full details, intending to provide the articles of association “in the next few days.” What happens?
Answer:
Companies House will not register the company until all statutory documents are received, including articles or confirmation that the Model Articles are to apply. Partial filings are insufficient for incorporation.
Worked Example 1.3
A founder wants to register “Royal Environmental Services Ltd” with a registered office in Cardiff. The company will engage in consultancy to local authorities. Are there any name issues?
Answer:
Yes. “Royal” is a sensitive word and likely requires prior approval. Words implying a connection with government or local authorities (e.g. “Environmental Services” combined with public-sector reference) may also need clearance depending on presentation. The founders should select a compliant name or seek approval under the Sensitive Words and Expressions Regulations. The registered office in Cardiff is valid for a company registered for England and Wales (or specifically Wales), but must be correctly stated; Welsh language equivalents may be used for the suffix.
Worked Example 1.4
Following incorporation, the board of Amber Tech Ltd allots 5,000 new ordinary shares to an investor. What statutory steps follow?
Answer:
Check authority to allot (s.550 for single class private companies; otherwise s.551 authorisation by OR or articles). Consider pre-emption rights and disapplication if needed. Pass appropriate board/shareholder resolutions. File the return of allotment on form SH01 with the updated statement of capital within one month. Update the register of members; issue share certificates within two months; keep minutes and any special resolution on file, and ensure any required filings of resolutions are made.
Key Point Checklist
This article has covered the following key knowledge points:
- The difference between incorporated and unincorporated businesses, and why registration is required for corporate status
- The mandatory documents and information (IN01, memorandum, articles) filed with Companies House to register a company, including the statement of capital, PSC information and statement of compliance
- Registered office and SAIL requirements and company name rules, including sensitive words
- The effect and use of Model Articles as default rules unless bespoke articles are filed, the s.33 contractual effect, and entrenchment options
- The legal effect and evidentiary value of a certificate of incorporation (s.15 CA 2006) and immediate consequences under s.16
- Risks, function, and customisation of shelf companies
- Promoter liability on pre-incorporation contracts under s.51 CA 2006 and how to manage it in practice (conditional contracts and novation)
- Core Companies House filing obligations during and after incorporation (accounts, confirmation statement, director/office changes)
- Practical share allotment steps and filings (authority, pre-emption, SH01, register of members, share certificates)
- The importance of accurate and timely filings; officers can commit offences for non-compliance
Key Terms and Concepts
- incorporated business
- unincorporated business
- incorporation
- Form IN01
- statement of capital
- statement of compliance
- memorandum of association
- articles of association
- Model Articles
- entrenchment (articles)
- ordinary resolution
- special resolution
- certificate of incorporation
- registered office
- SAIL (Single Alternative Inspection Location)
- PSC Register
- shelf company
- promoter
- pre-incorporation contract
- confirmation statement
- return of allotment (SH01)