You’ve received your certificate of incorporation from Companies House, which means you’re legally a company. Congratulations - this is an exciting milestone in any business’s journey!
Before you focus on making a success of your business, it’s important to take the time now to get to grips with certain legal obligations for new companies.
Why is this important?
Because in many cases, failure to meet your legal obligations is a criminal offence and both your company and its directors could be fined by Companies House. What’s more, if you don’t get your house in order from day one, you could damage your company’s credibility with potential lenders, investors or buyers later down the line.
What are your legal obligations?
As soon as they are incorporated, all new companies and their directors are under a range of basic record-keeping, disclosure and filing obligations. It won’t take too much effort for you to get things in order, and complying with these 5 key legal obligations will set you on the right track:
1. Registers, books and records
There are certain records that your company needs to keep and in most cases, failure to do so is an offence, punishable by fines.
a) Statutory registers
You must keep up to date registers of your company’s directors (and their residential addresses), shareholders, persons with significant control (PSCs) and any secretaries. Use this template to create customised company registers for your business.
b) Company record-keeping
You also need to keep certain records generated by your company on a day-to-day basis, including:
accounting books and records;
directors’ service contracts;
directors’ board minutes and decisions; and
minutes of shareholder meetings and copies of shareholder resolutions.
2. Filings at Companies House
Companies must file certain information at Companies House on a regular basis so that the public register can be kept up to date. For example, your accounts and confirmation statement must be filed annually, whereas other filings and updates will be triggered by different events (e.g. if you change your directors or issue new shares).
This Quick Guide to company books, records and filing will help you plan ahead.
3. Company stationery
Now you’ve incorporated, make sure you update your company stationery with your company’s name, registered number, registered office address and location in the UK. This information must be included in all company correspondence, including letters, emails, invoices, order forms and demands for payment.
In practice, most companies include this as a footer on their correspondence, which could look like this template:
Sparqa Limited (A company registered in England and Wales with company number 10199587 and its registered office at 17-21 Emerald Street, London, WC1N 3QN)
4. Display your company name
You must display your company’s full registered name at your registered office to make sure it’s visible to any visitors. There is an exception if you’re sharing your registered office address with multiple companies.
5. Company decision making
Now that your business is a company, there are certain formalities you’ll need to follow when making company decisions. These will be set out in your articles of association. If you use the default model articles, most day-to-day decision making will be carried out by your director(s), with certain key decisions (e.g. issuing new shares or changing your company name) falling to be made by your shareholder(s).
Make sure you understand what process needs to be followed to make and record your company decisions; this will reduce the risk of your decisions being challenged (or even unwound) later down the line. For example, you will need to make sure you give directors sufficient notice of board meetings and your meetings must be quorate (e.g. the minimum number of people required by your articles to attend must be in attendance in order for it to be valid).
As your company grows, there will be a range of other steps you can take to make sure your business is in good legal health. This legal health check will help you to identify any areas where your company might be at risk, and link you directly to the guidance and documents you need to put things right.
The content in this article is up-to-date at the date of publishing. The information provided is for information purposes only, and is not for the purpose of providing legal advice. ©Sparqa Limited 2021. All rights reserved.