Company incorporation, constitution and officers

The following types of company can be incorporated under the Companies Act 2006 (the CA 2006):

• a public company limited by shares

• a private company limited by shares

• a private company limited by guarantee, and

• an unlimited company

Incorporating or tailoring a company

Under the CA 2006, a company is formed by one or more persons:

• subscribing their names to a memorandum of association, and

• complying with the registration requirements prescribed in the CA 2006 (when Companies House shall issue a certificate of incorporation)

A company cannot be formed for an unlawful purpose.

A person wanting to set up a company has the following options:

• they can incorporate a company themselves, so that it is tailor-made to their requirements upon incorporation, or

• they can purchase a ready-made company from a company formation agent (a shelf company) and subsequently tailor that shelf company to their requirements

A company’s constitution

The provisions of a company's constitution bind the company and its members to the same extent as if there were covenants on the part of the company and of each member to observe those provisions.

Under the CA 2006, unless the context otherwise requires, a company’s constitution includes:

• the company’s articles of association, and

• any resolutions and agreements affecting a company’s constitution, as set out in section 29 of the CA 2006

This is not an exhaustive definition and additional documents may, expressly or by implication, be found to form part of a company's constitution for the purposes of certain provisions of the CA 2006.

Upon incorporation, a company can:

• have its own, bespoke articles of association (in which case, a copy of those articles of association must be sent to Companies House with the application to incorporate the company), or

• adopt the statutory model articles of association (in which case, it is not necessary to send any articles of association to Companies House with the application to incorporate the company)

Previously, the memorandum of association of a company was treated as an important part of a company's constitution. However, since 1 October 2009, the memorandum of association has been reduced to a simple statement of the subscribing shareholders that:

• they wish to form a company under the CA 2006, and

• they agree to become shareholders of the company and to take at least one share each

Any additional provisions contained in the memorandum of association of a company incorporated under legislation in force prior to the CA 2006 are now to be treated as provisions of its articles of association.

Appointment, retirement, resignation or removal of a director

A private company must have at least one director and a public company must have at least two directors - this is the minimum number of directors required by the CA 2006, but the relevant company's articles of association may require it to have more. At least one of the directors of any company must be a natural person.

A director of a company does not need to have any particular qualifications. However, certain categories of persons are ineligible to act as a company director, eg, anyone under the age of 16 (although a person younger than 16 can be appointed as long as that appointment does not take effect until that person is 16).

On incorporation, the first directors of a company are appointed by giving their details in the application to register a new company and indicating their consent to act as the directors of the company.

Thereafter, the appointment of a director is governed by a company's articles of association, save that special provisions apply under the CA 2006 where:

• at a general meeting of a public company, a motion for the appointment of two or more persons as directors of the company is made by a single resolution, or

• a person is being appointed to fill a vacancy arising from the removal of a director at the meeting at which the director was removed

Once appointed, a director may:

• retire from office (if the company's articles of association provide for a director to retire)

• resign from office, or

• be removed from office by an ordinary resolution passed at a general meeting in accordance with the CA 2006 or pursuant to a mechanism in the company's articles of association

A company’s articles of association may also set out certain circumstances in which a director will automatically cease to hold office.

Companies House must be notified of a person becoming or ceasing to be a director and the company’s internal records must be updated.

Appointment, retirement, resignation or removal of a company secretary

A private company does not need to have a company secretary, unless its articles of association require it to have one. A company secretary of a private company does not need to have any particular qualifications.

A public company must have a company secretary, who must have the requisite knowledge and experience to be the company secretary and have certain specified qualifications.

On incorporation, the first company secretary of a company is appointed by giving their details in the application to register a new company and indicating their consent to act as the company secretary of the company.

Thereafter, the appointment of a company secretary is governed by a company's articles of association.

Once appointed, a company secretary may resign from office.

It would be unusual, but a company’s articles of association may also:

• set out certain circumstances in which a company secretary will automatically cease to hold office

• provide for a company secretary to retire from office, or

• provide for how a company secretary may be removed from office

Companies House must be notified of a person becoming or ceasing to be a company secretary and the company’s internal records must be updated.

Trading disclosures

A company is required to disclosure certain information relating to its business and such disclosures are known as trading disclosures.

A company's registered name must be displayed in a specified manner at its registered office, any inspection place or other business location, except in very narrow circumstances relating to the appointment of a liquidator, administrator or administrative receiver.

A company’s registered name must be disclosed on:

• its websites

• its business letters, notices and other official publications

• its bills of exchange, promissory notes, endorsements and order forms

• cheques purporting to be signed by or on behalf of the company

• orders for money, goods or services purporting to be signed by or on behalf of the company

• its bills of parcels, invoices and other demands for payment, receipts and letters of credit

• its applications for licences to carry on a trade or activity, and

• all other forms of its business correspondence and documentation

In addition, a company must disclose certain additional information on its business letters, order forms and websites, eg, where it is registered in the UK, its registered number and its registered address.

Further, there are requirements relating to the disclosure of share capital, the names of directors, a company's registered office and the place where certain company records may be inspected.

A failure to make the required trading disclosures:

• has civil consequences, and

• has criminal consequences where the failure occurs without a reasonable excuse