What's Involved In Company Incorporation

Company incorporation is the American term for company formation. It is the legal process in which companies are registered and in legal terms it results in a corporation in effect being recognised as a person under law. This legal status allows the company to trade. Company incorporation can be applied to a business, a not for profit organisation a sports club or even a new governing body.

In the UK process of becoming a company can be completed through two processes. Either the paper process or alternatively the electronic process. The UK is renowned for being one of the quickest places in which a company can be incorporated. In some cases it has taken as little as 5 minutes to set up a company through the electronic application process.

There are a wide variety of different types of company that can be set up in the UK. These include a Public Limited Company, Private Limited Company, a company limited by guarantee, and unlimited company, a limited liability partnership, limited partnership, societas europaea, royal charter and community interest company.

Private Limited Company

A limited company is a company that is limited by shares. The company has shareholders that own shares in a company. The liability for these shareholders is limited to the capital that was originally invested. This means that in the event of the company facing insolvency the personal assets of the shareholder will not be under threat. The money that is lost will only be from the value of the shares that the shareholder owns. Companies can be either public or private. Public companies are those that release shares of their company onto the stock exchange. Most companies tend to be private limited companies.

Company limited by guarantee

Companies that are limited by guarantee are typically utilised by not for profit organisations that require a legal entity. In these cases there is not a need for share capital and guarantors have an undertaking to meet a agreed cost in the event that the company limited by guarantee becomes obsolete.

Unlimited company

In an unlimited company the liability of the members is unlimited. This means that if the company is forced into compulsory liquidation then each member of the group is required to contribute to pay off the debts of the company. This is as a result not a very popular option for many businesses. To register an unlimited company online will cost around 250 pounds.

Limited liability partnership

A limited liability partnership places limited liability on all partners in the partnership. Each of these partners have a limited liability if the business becomes insolvent. The partners each have a right to manage the business directly and as a result it is a very different arrangement to that of a company with shareholders.

Royal charter

Royal charters are charters that are granted by the queen on the advice of a council named the privy council. It is a legal status that is used to legitimise incorporated bodies such as a city, a company or a university. It used to be the case in mediaeval times that this was the only way on which a city was established. In the past it was also the only way in which a company could become an incorporated body but nevertheless there are many more ways to register now.

About the Author

Shaun Parker has an extensive range of experience in forming new european companies. He helps advise people about company incorporation and company formation so that you can know exactly what steps to take.

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About the Author

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