Incorporation and Formation Procedures

Under section 7 of the Companies Act 2006, one or more persons may form a company by subscribing their names to a memorandum of association and complying with the registration requirements.

Notice what this provision doesn't require: no minimum number of founders beyond one, no minimum capital for a private company, no elaborate ceremony. A single person can subscribe their own name and form a company alone. The memorandum itself is deceptively thin. It is simply the document in which the subscribers declare that they wish to form the company, agree to become members of it, and — if the company is to have a share capital — agree to take at least one share each. Under the old law (pre-2006), the memorandum did much heavier lifting: it fixed the company's objects (what the company was legally permitted to do) and its authorised share capital (the ceiling on how much share capital it could ever issue). The Companies Act 2006 stripped both of those functions out. Today the memorandum is a one-off snapshot of who founded the company and how many shares they took — it is not amended afterward and carries none of the ongoing constitutional weight it once did. That weight has shifted entirely to the articles of association, which we come to shortly.

The Registration Application

Subscribing the memorandum is only the first document. To actually register the company, the applicant must deliver to the Registrar of Companies:

1. The memorandum of association;
2. An application for registration; and
3. A statement of compliance,

together with the prescribed fee. Think of the application for registration as the company's intake form — it has to answer a fixed set of questions before the Registrar will issue anything.

The application must state:

• The company's proposed name;
• Whether the registered office will sit in England and Wales, in Wales specifically, in Scotland, or in Northern Ireland (this single choice fixes which court system and which local company law nuances govern the company for its lifetime);
• A statement of capital and initial shareholdings — required for a company limited by shares, this lists the shares being issued on incorporation and to whom;
• A statement of guarantee — the guarantee-company equivalent, listing what each member promises to contribute if the company is wound up while they are a member;
• A statement of proposed officers — naming the directors and, if one is to be appointed, the company secretary;
• A statement of initial significant control — identifying anyone who is a "person with significant control" (PSC) over the company, i.e., someone whose ownership or influence crosses the thresholds Parliament decided the public should be able to see.

Finally, the statement of compliance is the applicant's formal assurance that everything required by the Companies Act 2006 has actually been done. Here is a fact that surprises many trainees: the Registrar is legally entitled to take that statement at face value. The Registrar may accept the statement of compliance as sufficient evidence of compliance without further enquiry — the system runs on trust backed by criminal sanctions for false statements, not on the Registrar re-checking every filing line by line. That is precisely what allows same-day incorporation to exist.

Articles of Association: The Company's Operating Manual

If the memorandum is the birth certificate, the articles of association are the operating manual — the constitutional document that sets out the internal rules for how the company is run, managed, and owned: how directors are appointed and removed, how board and shareholder meetings are conducted, how shares are transferred, and so on.

Not every company writes its own. Under section 20 of the Companies Act 2006, if a company registers without submitting bespoke articles, the relevant Model Articles apply by default. The Companies (Model Articles) Regulations 2008 set out three separate defaults — one for private companies limited by shares, one for private companies limited by guarantee, and one for public companies — because these three vehicles have structurally different needs (a guarantee company, for instance, has no shares to transfer). A company can also take a hybrid approach: adopt the Model Articles subject to specific amendments, in which case only the amending provisions need to be registered, not the whole restated document. This is the standard efficient move for a client who wants Model Articles with one or two tweaks (say, restricting share transfers) rather than drafting from a blank page.

Whichever articles apply, section 33 of the Companies Act 2006 gives them contractual force: they bind the company and its members as though each member had personally covenanted — signed a deed — to observe them. This is the statutory "constitution as contract" doctrine that underpins shareholder disputes throughout company law.

From Application to Existence: The Certificate of Incorporation

Once the Registrar is satisfied the registration requirements are met, it issues a certificate of incorporation. This single document performs three jobs at once. First, it is an evidentiary document: it states the company's registered name, its registered number, its date of incorporation, and whether it is limited or unlimited. Second, and more powerfully, section 15(4) of the Companies Act 2006 makes the certificate conclusive evidence that the Act's registration requirements have been complied with — meaning that even if some procedural defect occurred in the background, once the certificate is issued, the company's existence cannot be attacked on the ground that registration was flawed. Third, the certificate is the trigger event itself: the company comes into existence as a body corporate on the date of incorporation shown on the certificate — not on the date the application was filed, not on the date the directors intended to start trading, but on the date printed on that certificate.

On that same date, the subscribers to the memorandum automatically become the company's first members, holding whatever number of shares was stated against their names in the application. No separate share allotment resolution is needed for those founding shares — incorporation itself does the allotting.

Key point for practice: a private company limited by shares can be validly formed and run with a single director who is also its sole shareholder. There is no statutory floor of two people for a private company.

Officers, Registers, and the Registered Office

Private and public companies diverge sharply on who must run them. Under section 270 of the Companies Act 2006, a private company is not required to appoint a company secretary at all (though it may choose to). A public company has no such luxury: it must appoint at least one qualified company secretary and must have at least two directors. This reflects Parliament's view that public companies, which can raise money from the investing public, need more institutional oversight than a one-person private company.

Every company, public or private, must maintain a registered office in the part of the United Kingdom stated on incorporation — this is the company's official address for service of legal documents, and it cannot simply be omitted. Certain statutory registers (such as the register of members) can instead be kept for public inspection at a nominated Single Alternative Inspection Location (SAIL address), giving companies with a registered office that is, say, a solicitor's accommodation address somewhere more practical to store bulky registers.

Following incorporation, the company must keep these statutory registers current — including, at minimum, a register of members and a register of directors. In practice, a newly incorporated company will hold a first board meeting shortly after incorporation to appoint officers formally, approve the issue of share certificates, adopt a bank mandate, and set an accounting reference date. None of this is a registration formality with the Registrar — it is internal housekeeping that a competent solicitor advising a new client should always put on the checklist.

Naming the Company

A name is not just a label; it is a regulated field with real legal consequences. A private limited company's name must end with "Limited" or "Ltd" (or the Welsh equivalents "Cyfyngedig"/"Cyf"), subject to narrow exemptions (for example, certain community interest or charitable companies). A public company's name must end with "public limited company" or "plc." These suffixes exist precisely so that anyone dealing with the company — a supplier extending credit, say — can tell at a glance what kind of liability shield they are dealing with.

Names are also policed for content. A proposed name containing a sensitive or restricted word (think "Royal," "Chartered," or words implying a government connection) requires prior approval before the Registrar will accept it — the applicant typically needs a supporting letter from the relevant body before the name clears registration.

Off-the-Shelf Companies

Not every client wants to wait even for same-day incorporation. Off-the-shelf shell companies — pre-formed, sitting on a formation agent's shelf with a generic name, a nominal director, and one subscriber share — can be purchased ready-made and then have their name, officers, and share structure changed to fit the client. This is faster than incorporating from scratch because the certificate of incorporation already exists; the solicitor's job becomes a series of post-incorporation changes (special resolutions to change the name, board resolutions to appoint new officers, share transfers) rather than an original application to the Registrar.

A public company faces one obstacle a private company never sees. Even after incorporation, a public company must obtain a trading certificate from the Registrar under section 761 of the Companies Act 2006 before it may do business or exercise any borrowing powers at all. Incorporation alone is not enough to let a plc actually trade — it exists as a legal person but is, in effect, in a holding pattern until the trading certificate is granted.

To qualify for a trading certificate:

• The company's allotted share capital must have a nominal value of not less than the authorised minimum; and
• at least one-quarter of the nominal value of the allotted shares, plus the whole of any share premium, must be paid up.

The authorised minimum for a public company's share capital under the Companies Act 2006 is £50,000 (or the prescribed euro equivalent). This is a hard floor: a plc cannot get its trading certificate — and therefore cannot legally trade — until its allotted capital clears this threshold and the one-quarter-plus-premium payment condition is satisfied.

The policy logic is straightforward: because a plc can invite the public to invest and its shareholders enjoy limited liability, Parliament wanted a guaranteed minimum buffer of capital actually committed to the company before it is let loose on creditors and the market.

Source: Companies House, Cardiff - geograph.org.uk - 1521422 by Peter Church, CC BY-SA 2.0.

Companies House offers a same-day registration service for online applications submitted before 3pm on a business day — useful when a client needs a completion to happen that afternoon, but it comes at roughly one-and-a-half times the standard fee. Note that the applicable fee is fixed by the date of incorporation, not the date of submission, so a same-day applicant pays the same-day rate precisely because they are buying speed of completion, not just speed of filing.

The Economic Crime and Corporate Transparency Act 2023 introduced a significant integrity check that solicitors advising on incorporations now have to build into every engagement: identity verification became mandatory from 18 November 2025 for:

• new company directors and PSCs registered from that date; and
• new LLP members and designated members registered from that date.

In practice, this means a director or PSC being appointed on incorporation must obtain a verified identity (directly through Companies House or via an authorised corporate service provider) before or as part of that appointment — a step that did not exist under the pre-reform regime and that a candidate advising a new-company client must now factor into the timeline.

The same Act also closed a structural loophole: at least one director of a company must be a natural person — a company can no longer be run entirely by corporate directors with no accountable human being behind them.

Step away from companies entirely and the picture changes completely. Under section 1 of the Partnership Act 1890, a partnership is the relation which subsists between persons carrying on a business in common with a view of profit. Notice what is conspicuously absent from that definition: any mention of registration, any mention of a written agreement, any mention of the Registrar of Companies at all.

That absence is the whole point. A general partnership arises automatically from the conduct of the parties the moment the statutory test is satisfied — carrying on a business, in common, for profit. No written partnership agreement is legally required. Two people who start splitting profits from a joint venture are partners in law whether or not either of them has ever used the word "partnership," and whether or not anything has been signed.

Because there is often no bespoke agreement, the Act supplies a fallback: in the absence of an express or clearly implied agreement, the default rules in the Partnership Act 1890 govern the relationship — profit-sharing, decision-making, and dissolution rules that apply by default and can catch out partners who assumed "we never wrote anything down" meant "there are no rules."

The price of this formality-free formation is severe exposure. Partners have unlimited personal liability for the partnership's debts and obligations, because a general partnership formed in England and Wales has no legal personality separate from its partners — there is no corporate veil to hide behind. Two specific liability rules matter for SQE1:

• Under section 9 of the Partnership Act 1890, partners are jointly liable for debts and obligations the firm incurs while they are partners.
• Under section 10 of the Partnership Act 1890, partners are jointly and severally liable for the wrongful acts or omissions of a partner acting in the ordinary course of the firm's business.

The joint-and-several standard in section 10 is the one that should make a client's eyes widen in a client interview: if one partner commits a tort in the ordinary course of business, every partner can be pursued individually for the whole loss, not merely their proportionate share.

The Sole Trader: Even Less Formality

At the opposite extreme from the company sits the sole trader, who requires no formation formalities and no registration with the Registrar of Companies whatsoever, because a sole trader has no legal identity separate from its owner — there is nothing to register, because there is no separate "it" to bring into being. The trade-off is the mirror image of the company: total simplicity of formation against total personal exposure to the business's debts.

The limited liability partnership (LLP) sits deliberately between these two worlds — partnership-style flexibility with company-style limited liability — and it is formed under its own statute, the Limited Liability Partnerships Act 2000.

Under section 2 of the Limited Liability Partnerships Act 2000, at least two persons associated for carrying on a lawful business with a view of profit must subscribe their names to an incorporation document to form an LLP. That document must state:

• the LLP's proposed name;
• the location of its intended registered office; and
• the name of each person who is to become a member.

The incorporation document must be delivered to the Registrar together with a statement, made by a solicitor or one of the subscribers, confirming the statutory formalities have been complied with — functionally the LLP equivalent of a company's statement of compliance.

Companies House uses form LL IN01 to register an LLP, mirroring the company registration process — deliver the form, pay the fee (£100 as of February 2026, per the table above), and the Registrar processes the application.

At least two members of an LLP must be designated members, a special sub-category responsible for filing duties — accounts, confirmation statements, and similar Companies-House-facing obligations. The Act includes a safety valve: if an LLP ever has fewer than two designated members, every member is automatically deemed a designated member, so the filing obligations can never fall through the cracks for want of a properly appointed designated member.

On registration, the Registrar issues the LLP a certificate of incorporation confirming its registered name and registered number — the same conceptual milestone as for a company, marking the point the LLP springs into legal existence.

Why Clients Choose an LLP

The commercial appeal of the LLP rests on two pillars. First, under section 1(2) of the Limited Liability Partnerships Act 2000, an LLP is a body corporate with legal personality separate from its members — unlike a general partnership, it can hold property, contract, sue, and be sued in its own name, and a member's liability for the LLP's debts is limited to whatever is agreed under the members' agreement or to their contribution to the LLP's assets on a winding up.

Second, an LLP's day-to-day internal relations are typically governed by a private members' agreement, which — unlike the articles of association of a company — does not need to be filed with the Registrar. This lets the members keep profit-sharing ratios, decision-making rights, and exit terms confidential, something a company's public articles cannot offer.

Tax treatment is the other major driver of client choice: for income tax purposes, an LLP is generally tax-transparent — each member is taxed individually on their share of profits, rather than the LLP itself paying corporation tax as a company would. This is frequently the deciding factor for professional-services businesses (accountants, consultants, some legal practices) choosing between an LLP and a company.

Like companies, LLPs are also caught by the 2023 reform: identity verification became mandatory from 18 November 2025 for new LLP members and designated members registered from that date, exactly mirroring the director/PSC regime for companies.

A recurring SQE1 scenario is the client who walks in wanting to start a business and asking which vehicle to use. There is no single right answer — the choice is a trade-off across three axes:

A client prioritising speed and simplicity, with modest liability exposure, may be steered toward a sole trader or general partnership. A client wanting the liability shield and confidentiality of private internal arrangements, without corporation tax, is often steered toward an LLP. A client wanting the most recognisable, most easily financed, and most flexible vehicle for raising external investment will generally be steered toward a company limited by shares, accepting the extra formality — the memorandum, articles, statement of compliance, and now, identity verification — as the price of that flexibility.

Every incorporation question on the exam reduces to the same skeleton: what document triggers formation, who has to deliver it to whom, and what does the resulting certificate prove? For companies, the memorandum plus the section 7 application, verified by a statement of compliance, produces a certificate of incorporation that is conclusive under section 15(4). For LLPs, the incorporation document under section 2 produces an equivalent certificate. For general partnerships and sole traders, there is no certificate at all — existence is a question of fact about what the parties are actually doing, not a question of what has been filed. Keep that distinction sharp, and the formation questions across FLK1 and FLK2 become a matter of matching the fact pattern to the right statutory pigeonhole. </content>