Companies Act 2006 – Incorporation
To make it easier to set up and run a company there are a number of changes to the company incorporation process. The new system of incorporation will be preceded by a ‘clearing period’ to process any application made under the Companies Act 1985 that is received before 1st October 2009.
The new incorporation process will require an application to register a company (Form IN01) accompanied by a memorandum of association, the articles of association and the correct fee.
The memorandum of association is a much shorter document which will serve the limited purpose of providing evidence of the intention of each subscriber to form a company and become a member of that company. In the case of a company that is to have a share capital on formation, each member agrees to take at least one share.
There will be 3 types of articles: model articles, model articles with amended provisions and bespoke articles. The articles will include the company’s liability and assets and the objects.
Amendments to a company’s articles must be notified to Compaies House within 15 days, and failure to comply will be a criminal offence. The Companies Act 2006 introduces a new civil penalty of £200 for failure to comply in response to a notice from the registrar.
Authorised / nominal share capital will be discontinued on incorporation, which means that there will also no longer be a limit set out in the Memorandum on the number of shares that directors can issue. Currently a special resolution is required to increase the authorised capital if directors wish to issue shares above the limit in the memorandum. However shareholders can seek controls on the issue of shares by Directors in the Articles.
Finally, the need for a solicitor to make a statutory declaration of compliance will be replaced with a statutory statement of compliance from the company – also designed to make the company incorporation process simpler. The statement maybe made in paper or electronic form and need not be witnessed. It will be an offence to make a false statement of compliance.
